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Gazprom EP to drill 5 more gas wells at higher cost

Ashraful Islam Raana
30 Nov 2023 21:12:17 | Update: 30 Nov 2023 21:55:44
Gazprom EP to drill 5 more gas wells at higher cost

Despite mounting criticism, the government has awarded the Netherlands-based Gazprom EP International BV the contract to drill five more gas wells at higher cost.

The gas wells awarded to Gazprom EP and discovered by state-owned Bangladesh Petroleum Exploration and Production Company (Bapex) are Shahbazpur-5, Shahbazpur-7, Shahbazpur Northeast-1, Bhola North-3 and Bhola North-4, all are located in Bhola. The drilling work is expected to be completed by 2025, sources in Energy and Mineral Resources Division said.

Petrobangla Chairman Janendra Nath Sarkar said a decision has been taken in principle to give five gas wells to Gazprom EP. They have rigs in Bangladesh and can start drilling wells soon, he added.

After the natural gas reserve confirmation by Bapex and wells drilling by foreign company Gazprom EP, there has been a longstanding controversy, because Bapex has been spending Tk 60 crore to Tk 70 crore on drilling a well, according to Bapex monthly management information system report. But Gazprom charged around Tk 150 crore to Tk 170 crore in the past.

Gazprom EP has drilled more than 20 gas wells in Bangladesh. Energy Division has been repeatedly claiming that they awarded Gazprom EP the drilling contract at double cost as Bapex does not have the capacity.

Former Petrobangla chairman Nazmul Ahsan told The Business Post that Bapex works on a large scale in gas exploration, drilling and work overs but it (Bapex) is still not capable of drilling deep wells. “As a result, Gazprom is given work where Bapex is not capable.”

However, Bapex officials do not agree with Petrobangla and Energy Division. At least three officials told The Business Post that the wells Gazprom drilled could be dug by Bapex at lower cost. But due to various vested groups, Gazprom EP is getting the job.

International geologist professor Badrul Imam said Gazprom's success in Bangladesh is not mentionable. Gazprom gets drilling job with various kinds of shelters. Gazprom EP is working in the gas sector in Bangladesh but is never interested in gas exploration. Besides, Gazprom EP charges twice as much as Bapex to drill wells.

The demand for gas is increasing significantly in Bangladesh, but the exploration and production of gas is not being increased accordingly. Since 2018, the government has resorted to importing high-cost liquefied natural gas (LNG) to meet the demand for gas.

But due to US dollar crisis, it is now trying to increase domestic gas production. Last year Petrobangla planned to drill 46 wells by 2025 to increase onshore gas production. The target was set to increase the production to 618 million cubic feet of gas from these wells.

Mohammad Amirul Islam, researcher at Norwegian multinational oil and gas company Equine, said Bangladesh has very promising gas reserves. If these gas fields are developed using appropriate technology, it is possible to meet the gas demand. Seismic survey and well drilling are required using advanced technology. Determining the location of the well is an important issue.

The Petrobangla data shows that among Gazprom's 20 wells, Shreekail-4 was discovered in 2010 at a depth of 3,512 metres in Shreekail gas field at a cost of $18.88 million. Gas worth $195.813 million has already been lifted. Currently, 16.118 MMcf/d gas is being extracted from Shreekail-4 and it will be continuing for next 15 years, said Petrobangla.  

Gazprom drilled Begumganj-3 well in Noakhali at a cost of $16.27 million at a depth of 3,565 metres in 2014. The well has already produced 13.224 BCF of gas worth $79.344 million. Currently, the well is extracting gas at 8.1927 MMcf/d and it will continue for next 15 years, said Petrobangla.

In 2014, Gazprom EP drilled Shahbazpur-3 well at a cost of $17.19 million at a depth of 3,902 metres. The well has already produced 43.53 bcf of gas worth $261.204 million. It is currently producing 21.65 MMcf/d gas.  

Gazprom constructed the Shahbazpur-4 well at a cost of $17.19 million in 2014 at a depth of 3512 metres. The well has already produced 40.004 bcf of gas worth $240.026 million. It is currently producing 24.9365 MMcf/d gas and it will continue for 15 years.  

Gazprom also drilled Shahbazpur East-1 at a cost of $15.09 million at a depth of 3,550 metres in 2021. The well has so far produced 5.097 BCF of gas valued at $30.582 million. Currently, 22.4262 MMcf/d gas is being extracted from the well and it can be extracted for next 25 years.

According to Petrobangla, currently the gas demand in the country is around 4,000 MMcf/d. It is, however, supplying only 2,550 MMcf/d. That’s why the country’s manufacturing industries are facing severe gas shortage.