India and Myanmar have attracted considerable interest from international oil and gas companies (IOCs) in recent years following a number of significant discoveries in the Bay of Bengal. Now it appears that Bangladesh is ready to tempt the worldwide petroleum industry into investigating the untapped gas potential of its offshore acreage. The country is preparing to launch its Third Licensing Round towards the end of the year, after the Bangladesh High Court in July 2006 partially vacated an injunction on the signature of Production Sharing Contracts (PSCs) with foreign companies.
Bangladesh is one of the world's poorest and most densely populated countries. Not only is it highly vulnerable to natural disasters such as cyclones, flooding and drought, it is also associated with civil unrest, political instability and widespread corruption all of which can be viewed as a deterrent to the country's attractiveness as an E&P destination. Natural gas is the only significant source of commercial energy, and accounts for almost 75% of commercial energy consumption. The largest gas consumers are the power and fertilizer industries, which account for around 70% of daily production. Current supply capacity of 1,450 MMcf/d, however, is insufficient to meet the projected growth in demand; gas consumption, currently at 1,400 MMcf/d, is expected to grow at a rate of 10% per annum. Some 23 onshore / offshore exploration blocks were delineated ahead of the First Licensing Round in 1993. Six PSCs were awarded in the round: Cairn Energy-Holland Sea Search,
United Meridian Corporation.
A highly protracted Second Licensing Round was launched in 1997, and a further four PSCs were eventually awarded to Shell-Cairn Energy - Bapex,
Tullow-Chevron Texaco - Bapex,
Although many of these companies have subsequently left, following a number of asset swaps and company acquisitions in recent years, IOCs present today are Cairn Energy, Chevron, HBR Energy, Niko Resources, Okland-Rexwood, Tullow and Total. The latter is currently awaiting government approval for a 60%.
Exploration activity has predominantly been conducted in the eastern onshore, with the west and the offshore remaining relatively under-explored. Only 110 exploration wells have been drilled to date 65 of which are New Field Wildcats, with only 13 being drilled in the offshore. A total of 25 discoveries have been made, giving overall a highly impressive 38% success rate. However, exploration has been stagnant in recent years, since IOCs effectively placed a moratorium in the late 1990s, pending the development of a local gas market and a decision by the Bangladeshi Government on the politically-sensitive issue of gas export to India. The government has long been reluctant to come up with a policy on gas export, choosing not to commit itself to gas supply contracts whilst reserve estimates remain uncertain. A decision was subsequently made to retain the current gas reserve for domestic use and fulfil the rising domestic gas demand.
Fig 2. Gas production 2000 to 2005.
Current and Future Production
Bangladesh is currently producing 1,400 MMcf/d and 3,500 bc/d (Fig 2). Oil production from the Sylhet Field ceased in 1994. The three state-owned companies Bangladesh Petroleum Exploration & Production Company Ltd (Bapex), Bangladesh Gas Fields Company Ltd (BGFCL) and Sylhet Gas Fields Ltd (SGFL) are responsible for around 950 MMcf/d from eleven fields, with three IOCs Cairn Energy, Chevron and Niko Resources responsible for 450 MMcf/d from four fields. Of the two offshore discoveries made to date, only one has been developed the Sangu Field, discovered by Cairn Energy in February 1996, and currently producing 150 MMcf/d. Production levels are expected to increase significantly in the near future, when Chevron (already the...