Gazprom wants to hike costs for gas production

Russian energy giant Gazprom has proposed to extract gas from five wells in Bhola for Tk 2.64 billion per well.

The cost for gas extraction will increase by Tk 840 million per well. Earlier, the energy company extracted gas Tk 1.80 billion per well.

The total cost to extract gas from five Bhola wells will increase by Tk 4.20 billion.

The technical committee constituted by Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) carried out verification of the proposal as well as primary negotiations. Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) representatives were involved the process. The proposal was sent to the Proposal Processing Committee (PPC) led by the energy secretary in mid-March for final approval. This committee will finalise the proposal.

About the increase of costs, the committee members said pipes of MS metal are used in all wells of the country. This is not sustainable for long. So high quality chromium metal will be used this time. This will be longer lasting for extracting gas. As a result, the price is increasing. The cost will decrease by Tk 220 million if MS pipes are used.

Speaking to Prothom Alo, energy and mineral division secretary Nurul Alam said the proposal has not been finalised yet. The technical committee has been given responsibility to negotiate further over the price proposal.
Gazprom will certainly decrease the costs.

Gazprom has increased costs every time. The company got the drilling of a well in 2012. At the time, they took Tk 1.51 billion per well. They took Tk 1.54 billion in 2017. Gazprom has drilled 20 wells so far. They have drilled seven wells in Bhola. They have obtained the work order without any tender under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act.

Experts said BAPEX itself can drill wells for Tk 800-850 million. The waste of funds can be avoided and foreign currency can be saved. Besides, there is no hurry as the means to fully use the gas of Bhola had not be created as yet. Rather the number of wells can be increased gradually through BAPEX.

On condition of anonymity, two officials at Petrobangla and BAPEX said industries could not be increased there to use gas from Bhola. On the other hand, the pipeline could not be set up to take gas out of Bhola.

BAPEX acting managing director Md Shoaib, speaking to Prothom Alo, said the government has a plan to construct a pipeline to take gas out of Bhola. This must have a capacity of supplying 300 million cubic feet of gas to make it commercially viable. Currently, there is a capacity of extracting 180 million cubic feet of gas from nine wells. If five new wells are drilled, the production will increase by 100 million cubic feet. Negotiations are on over the proposed cost.

BAPEX has discovered three gas fields in Bhola. Of these, two wells will be drilled in Shahbazpur gas field and two wells in Bhola north gas field. Development wells will be made for starting production of gas from these four wells. An exploring well will be drilled between two gas fields. If an agreement is signed with Gazprom soon, they will finish drilling these five wells by December next year.

Petrobangla and BAPEX officials said it is necessary to extract gas immediately. Projects have been taken to drill 46 wells in three years. If BAPEX does it alone, it will take over 10 years. So alongside utilising the 100 per cent capacity of BAPEX, the contractors are being appointed.

Speaking to Prothom Alo, geologist Badrul Imam said no effective steps have been taken to supply gas from Bhola. In such a situation, it is not logical to drill wells one after another. It was urgent to construct a pipeline to take gas out of Bhola. Moreover, there is no logic to drill wells by Gazprom when BAPEX itself can drill wells at low cost.

*This article, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam