Gazprom, Sinopec vying to win drilling deal for Bangladesh onshore gas wells

Bangladesh is evaluating bids from Russia's Gazprom and China's Sinopec to select one of them as contractor for drilling four onshore wells in state-owned gas field Titas, Petrobangla Chairman Hussain Monsur said Tuesday.

Gazprom EP International, registered in the Netherlands, and Sinopec International Petroleum Service Corporation submitted bids to drill wells in the Titas gas field owned by Petrobangla's subsidiary Bangladesh Gas Fields Company Limited, Monsur told Platts.

The wells to be drilled by the selected contractor are -- Titas-23, Titas-24, Titas-25 and Titas-26 in Brahmanbaria district in central Bangladesh. Titas, located some 100 km off the capital, is Bangladesh's second largest producing gas field after the Chevron-operated Bibiyana gas field.

Titas is currently producing around 500,000 Mcf/d across 20 producing gas wells against an overall production capacity of 503,000 Mcf/d, Petrobangla data reveals.

In comparison, Chevron's Bibiyana, located in Bangladesh's northeastern region, is currently producing around 820,000 Mcf/d of gas, the data also showed.

CONTRACTOR TO BE RESPONSIBLE FOR THIRD PARTY ENGINEERING SERVICES

In addition to drilling the four wells, the selected contractor would also be responsible for third party engineering services regarding the drilling of the wells.

The third party engineering services include cementation, mud logging, wire-line logging, supplying of explosive, detonator core & PVT analysis, drill stem testing wire-line or slick-line operation, supply of drill bits and nozzles, supplying of mud and completion chemicals.

The Asian Development Bank will provide majority of the costs to drill the onshore gas wells in the Titas gas field, Monsur said.

Gazprom, the first foreign company operating in Bangladesh on a contract basis, got its first gas in the country in May 2013, when it was testing the Srikail-3 onshore well in Comilla, about 86 km southeast of Dhaka.

Other international oil companies active in Bangladesh operate under production sharing contracts or in joint ventures with Bangladesh Petroleum Exploration and Production Company, or Bapex.

The Russian company has so far completed drilling four wells -- Srikail-3, Titas-20, Titas-21 and Begumganj-3 -- and gas is being supplied to the national grid from three wells, except Begumganj-3. Production from Begumganj-3 will begin on completion of a gas transmission pipeline and process plant, Monsur said.

Gazprom had signed deals with Petrobangla subsidiaries Bangladesh Gas Fields Company Limited, or BGFCL, Sylhet Gas Fields, and Bapex on April 26, 2012, to drill 10 development wells across six gas fields at a cost of $193.5 million. Gazprom's contracts cover construction of the drilling pad, camp warehouse and site preparation, rig shifting and commissioning, procurement of drilling materials, engagement of third party services, drilling, testing and commissioning and insurance.

Under these deals, the Russian company is designing four wells at Titas, two in Shahbazpur, one in Rashidpur, one in Semutang, one in Begumganj and one in Srikail, at depths ranging from 2,900 to 4,050 meters. Eight wells will be inclined and two will be vertical, and the work will take 18 months to complete. SINOPEC'S FIRST INVOLVEMENT IN BANGLADESH, IF AWARDED

If awarded, it would be Sinopec's first-ever involvement in Bangladesh's oil and gas exploration activities.

A consortium of Sinopec Shengli and US' Longwood Resources was previously in talks with Bapex to develop four onshore fields in Bangladesh's Chittagong region under a joint venture. But the government in September last year ended the negotiations and decided not to award the planned work program to the consortium "as the representation of state-owned oil and gas firms in the JV was very nominal at around 10%," Monsur had said at the time.

The consortium was also seeking sales rights to third parties for its gas to be produced after developing the four onshore fields in the southeastern hilly region. The four fields planned for development were -- Kotia, Joldi, Kafalong and Shitapahar -- all located in block 22, which spans 13,900 sq km of the restive Chittagong Hill Tracts region, where a slow-burning insurgency has killed 2,500 since the 1980s.

Bangladesh's natural gas output currently hovers around 2.24 Bcf/d against demand of 2.7-3.0 Bcf/d.

(platts.com Feb 11, 2014)