Santos Bangladesh to Supply Gas From New Discovery by April
Industrial units in Chittagong plan to buy natural gas at market price from Santos from April.
The Australian firm said Tuesday it has found commercially viable gas in the Block-16 in the Bay of Bengal.
A report in Financial Express Bangladesh said Santos will sell gas from the Sangu-II well at market price, as the government has already allowed the Australian firm to sell new gas from its offshore structures.
It is the only international oil company (IOC) in Bangladesh that has been allowed to sell natural gas directly to private buyers, from its new offshore fields in the Block 16, the report said.
According to the report, all other IOCs operating in the country have to sell their gas to the state-owned Petrobangla first, which then sells it to the state-owned gas distribution companies to reach end-users.
Santos will first offer Petrobangla to buy the gas produced from its new offshore structures at market price. If Petrobangla refuses to buy, the Australian company will offer the gas to private buyers.
Industries in Chittagong will have to count at least 55 per cent more cost to buy gas from Santos, as the Australian firm has set US$4.50 per unit (1,000 cubic feet) as the baseline price for its new gas.
Santos now sells gas at $2.90 per unit to Petrobangla from the existing Sangu field. It has already received expressions of interest from over a dozen big privately owned companies in Chittagong for buying gas at market price due to growing gas shortage.
Energy experts said a competitive pricing of gas will woo the IOCs to make large-scale investment for hydrocarbon exploration in the country.
"Santos has informed us of getting new gas finding. It's a bit relief for easing the acute gas shortage in the port-city," Petrobangla Chairman Dr Hussain Monsur said Tuesday.
He hoped that at least 20-25 million cubic feet per day (mmcfd) of gas would be available from the new well for Chittagong's industrial customers.
This is the second time commercially viable gas reserves have been found offshore in Bangladesh, following the previous discovery by UK's Cairn Energy in 1996. Cairn, the previous operator of the Sangu field, found gas in the same block.
Santos acquired Cairn's interests in Bangladesh in November 2010. Following the acquisition, Santos became the operator of the country's only offshore producing gas-field, Sangu. It has a 75 per cent stake in Sangu, while Halliburton Energy has 25 per cent.
The firm is also the owner of the Magnama and Hatiya structures in the Block16. Santos began a $128 million three-well drilling programme in it in last October, but it did not discover any commercially viable gas reserve in the first two wells it drilled. The company completed drilling the South Sangu-4 and North East Sangu-1 wells in December.