The government is pushing Bapex to form a joint venture with Russian state-run Gazprom, which is performing poorly in carrying out a “fast-track” project to drill 10 wells at different gas fields in the country. Taking consent from the prime minister, Petrobangla in July asked Gazprom to submit a draft proposal for the joint venture. Petrobangla envisions that the joint venture may explore and dri
ll wells for oil and gas in difficult terrains of Jaldi, Kasalong, Sitapahar and Patia and also in the offshore blocks. This company may work in Myanmar and Russia in future as well. Although the Russian company is the largest gas extractor in the world, its performance in Bangladesh has so far been unimpressive. In April 2012, Gazprom was awarded an unsolicited deal to drill 10 wells in 20 months to increase gas production by 200 million cubic feet per day (mmcfd). But the Russian company so far could not finish the $200 million project and Petrobangla extended the deadline up to end of December. Bangladesh has been reeling from a gas supply shortfall of around 500 mmcfd. Gazprom is supposed to drill four wells in the large Titas gas field, two in Shahbazpur, and one each in Rashidpur, Srikail, Begumganj and Semutang. Instead of getting 200 mmcfd gas, Gazprom's work has so far produced maximum 108 mmcfd from eight wells, while tasks of two wells are underway. Advertisement Besides, one of the four wells in Titas went out of production after six months, while the lone well in Semutang is producing just 6 mmcfd gas. “Spending $20 million to produce just 6 mmcd gas cannot be justified. Sadly, when Bapex sought a budget of Tk 21 crore to drill the same well, Petrobangla disapproved it and gave it to Gazprom,” said an official asking not to be identified. A highly placed Petrobangla official said although the government had a deal with Gazprom, the Russian company hired another company to carry out the drilling. “It was expected that Gazprom would supervise their work, but they are not supervising it the way we had expected,” the official added. Petrobangla had estimated to have 200 mmcfd gas by drilling the 10 wells, but the real outcome might be way lower and yet that would not be considered as Gazprom's failure, the official observed. “We need to see if engaging a foreign company at such a high cost [$20m per well] is cost effective. But the results are very disappointing so far. These wells are producing very little gas against a very high expenditure. And again, one or two of these wells are dying as soon as they started production.” The official also clarified that Gazprom's drilling cost was three times the cost of Bapex mainly because the latter's schemes had typically kept hidden cost. “Bapex never adds the cost of keeping a rig idle, while Gazprom would add that cost as an integral part of a work,” the official noted. In the past, Bapex was forced to strike a joint venture deal with Canadian controversial company Niko to develop three marginal or previously used gas fields, but Niko had actually been given a new unexplored field. The Anti-Corruption Commission (ACC) in 2007 filed two cases against Sheikh Hasina and Khaleda Zia, both were former premiers then, and a number of officials and a Niko representative for the deal, which inflicted a loss worth millions of dollars to Bangladesh. Khaleda Zia's son Tarique Rahman's close friend Giasuddin Al Mamun was among the accused. A magazine of Canadian newspaper Globa & Mail in August 2011 revealed that Niko had paid $500,000 to Hawa Bhaban men to get a controversial joint venture deal with Bapex in 2003. Niko faced trial in Canada and it is practically not working in Bangladesh anymore.
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