Oil, gas exploration in the Magnama

Bapex to buy 49pc share of Santos

SHAHED SIDDIQUE with DEEPAK ACHARJEE
 
The Energy Division will invest USD 40.60 million (about Tk 325 crore) in the Bay of Bengal for the first time. Along with Australian oil giant Santos Bangladesh Ltd (SBL), it will explore oil and gas in the Magnama structure.
The SBL will drill a well in it this month.
That is not all. By making the investment, the state-owned Bangladesh Petroleum Exploration and Production Co. Ltd (Bapex) will buy 49 per cent shares of the SBL to get the benefit of the natural resources in the Bay of Bengal, sources told The Independent.
“A state-owned company buying an international oil company’s shares is like creating history in the energy sector,” said an official in the Energy Division.
The proposal of the Bapex will be submitted to the Cabinet Committee on Purchase, headed by the finance minister, for approval this week. “If the Cabinet approves the proposal, a Sale and Purchase Agreement (SPA) will be signed between the SBL and Bapex,” said a Petrobangla official.
The Prime Minister, who is also the minister of energy and power, approved the proposal on December 27 ast year.
To secure the investment, the draft SPA states that commercial gas could be sold in the open market to any interested party in Bangla-desh at a competitive price.
According to the proposal to the Cabinet, block 16 belongs to the Santos Sangu Field Ltd (SSFL) and SBL.
But the Sangu production area and the Magnama exploration ring are fenced. These are excluded from block 16.
The negotiation between the two parties says that for the Magnama area of the Bay of Bengal, the company name will be SBL. The SSFL will have 50 per cent, Bapex 49 per cent, and SBL will have the rest of shares.
Santos claims to have spent USD 92 million to conduct a seismic survey and to drill a well in the Magnama structure in 2007–2008. Santos has also submitted a proposal to drill a new well at Magnama-2 structure, which could need an investment of USD 35 million.
As a 49 per cent shareholder, Bapex will bear USD 23.10 million of the total cost of USD 92 million at Magnama-1. For Magnama-2, the state-owned company will share USD 17.50 million, totalling USD 40.60 million.
Santos’s predecessor Cairn Energy drilled an exploration well in Magnama in 2007–08 and carried out a 213km 3-D seismic survey in
early 2010.
Santos currently owns 100 per cent stakes of the Magnama structure in Block-16, following the acquisition of Cairn Energy’s interests in Bangladesh in November 2010.
Cairn Energy had conducted 213 sq km 3D seismic survey in the block. But the company
sold out its block to Santos without drilling any
well there.
During the negotiation with Bapex, Andrew DeHaris, president of Santos companies in Bangladesh, had written in a letter, “Magnama is located in the upper Bay of Bengal within
the large Ganges-Brahmaputra delta and covers an area of 515km. Santos’s arithmetically summed mean volumes for Magnama are approximately 357 billion cubic feet gas,
and the gas price we expect is $07 per million cubic feet.”
“The Magnama-2 drill is arguably one
of the better exploration prospects that BAPEX has in its portfolio of opportunities,” he
had written.
The official told The Independent that if the proposal is finally approved, the drill in Magnama will be completed by February 2016.
Md Nawshad Islam, managing director of Bapex, had informed Petrobangla on December 18, “If the drill is successful, the appraisal
and development well will be drilled in 2018–2019.
It could cost the government company around USD 119 million (Tk. 952 crore). But we have not been able to buy 49 per cent shares of SBL. At the board meeting of Bapex, it was decided that the amount to invest at Magnama would be collected from the Gas Development Fund (GDF). But the proposal was refused by the GDF management committee. So, there is still no fund for the investment.”
The country faces a crisis of more than 600 MMFC of gas per day, especially in the port city of Chittagong, which is close to the Magnama-2 structure.

Oil, gas exploration in the Magnama

Bapex to buy 49pc share of Santos

SHAHED SIDDIQUE with DEEPAK ACHARJEE The Energy Division will invest USD 40.60 million (about Tk 325 crore) in the Bay of Bengal for the first time. Along with Australian oil giant Santos Bangladesh Ltd (SBL), it will explore oil and gas in the Magnama structure. The SBL will drill a well in it this month. That is not all. By making the investment, the state-owned Bangladesh Petroleum Exploration and Production Co. Ltd (Bapex) will buy 49 per cent shares of the SBL to get the benefit of the natural resources in the Bay of Bengal, sources told The Independent. A state-owned company buying an international oil companys shares is like creating history in the energy sector, said an official in the Energy Division. The proposal of the Bapex will be submitted to the Cabinet Committee on Purchase, headed by the finance minister, for approval this week. If the Cabinet approves the proposal, a Sale and Purchase Agreement (SPA) will be signed between the SBL and Bapex, said a Petrobangla official. The Prime Minister, who is also the minister of energy and power, approved the proposal on December 27 ast year. To secure the investment, the draft SPA states that commercial gas could be sold in the open market to any interested party in Bangla-desh at a competitive price. According to the proposal to the Cabinet, block 16 belongs to the Santos Sangu Field Ltd (SSFL) and SBL. But the Sangu production area and the Magnama exploration ring are fenced. These are excluded from block 16. The negotiation between the two parties says that for the Magnama area of the Bay of Bengal, the company name will be SBL. The SSFL will have 50 per cent, Bapex 49 per cent, and SBL will have the rest of shares. Santos claims to have spent USD 92 million to conduct a seismic survey and to drill a well in the Magnama structure in 20072008. Santos has also submitted a proposal to drill a new well at Magnama-2 structure, which could need an investment of USD 35 million. As a 49 per cent shareholder, Bapex will bear USD 23.10 million of the total cost of USD 92 million at Magnama-1. For Magnama-2, the state-owned company will share USD 17.50 million, totalling USD 40.60 million. Santoss predecessor Cairn Energy drilled an exploration well in Magnama in 200708 and carried out a 213km 3-D seismic survey in early 2010. Santos currently owns 100 per cent stakes of the Magnama structure in Block-16, following the acquisition of Cairn Energys interests in Bangladesh in November 2010. Cairn Energy had conducted 213 sq km 3D seismic survey in the block. But the company sold out its block to Santos without drilling any well there. During the negotiation with Bapex, Andrew DeHaris, president of Santos companies in Bangladesh, had written in a letter, Magnama is located in the upper Bay of Bengal within the large Ganges-Brahmaputra delta and covers an area of 515km. Santoss arithmetically summed mean volumes for Magnama are approximately 357 billion cubic feet gas, and the gas price we expect is $07 per million cubic feet. The Magnama-2 drill is arguably one of the better exploration prospects that BAPEX has in its portfolio of opportunities, he had written. The official told The Independent that if the proposal is finally approved, the drill in Magnama will be completed by February 2016. Md Nawshad Islam, managing director of Bapex, had informed Petrobangla on December 18, If the drill is successful, the appraisal and development well will be drilled in 20182019. It could cost the government company around USD 119 million (Tk. 952 crore). But we have not been able to buy 49 per cent shares of SBL. At the board meeting of Bapex, it was decided that the amount to invest at Magnama would be collected from the Gas Development Fund (GDF). But the proposal was refused by the GDF management committee. So, there is still no fund for the investment. The country faces a crisis of more than 600 MMFC of gas per day, especially in the port city of Chittagong, which is close to the Magnama-2 structure.