Russian Gas Company Gazprom and Petrobangla signs an initial contract to drill 10 onshore gas wells in Bangladesh today.
The cabinet committee on government purchase last month approved awarding of the onshore well drilling contracts to Gazprom.
Officials said a number of issues including a framework for compensation in the event of a blowout and the payments of insurance premiums have been settled during couple of day’s discussions between officials of two parties.
The purchase committee has approved a Gazprom offer to drill 10 onshore gas wells at a total cost of $193.55 million to raise the country's overall gas output.
The Russian firm has assured to complete drilling within 18 months of signing the deal.
It has agreed to pay 5.0 per cent of the total cost as a performance guarantee.
Petrobangla Chairman expects to get around 300 million cubic feet per day (mmcfd) of gas once the 10-well drilling program is successfully completed.
Gazprom will be the first foreign company to partner with Petrobangla in oil and gas exploration without a production-sharing contract.
Under the work plan, Gazprom will drill five development wells in Titas and Rashidpur gas fields and five exploration wells.
Titas, owned by Petrobangla subsidiary, Bangladesh Gas Fields, is Bangladesh's second largest gas field, producing around 444 mmcfd of gas.
Rashidpur, owned by Sylhet Gas Fields, produces around 48 mmcfd.
Gazprom will also drill five exploration wells in four gas structures -- Begumganj, Shahbazpur, Semutang and Sundalpur -- owned by Bangladesh Petroleum Exploration and Production Company Ltd (Bapex).
Country's natural gas production is now hovering around 2,030 mmcfd against the demand for over 2500 mmcfd.
Gas supply shortfall has forced Petrobangla to suspend new gas connections to industries since July 2009, which has been squeezing industrial growth badly.
Gas connections to households remained suspended since July 2010 affecting newly built houses for use.
Gas rationing has been rampant and compressed natural gas (CNG) filling stations are kept closed four hours a day to cope with the gas supply shortfall.
The government of Bangladeshi Prime Minister Sheikh Hasima on 20 December approved the contracts for drilling 10 wells in existing gas fields by Gazprom. The move follows the signing of an agreement with Russia for a nearly $2 billion nuclear power plant that will be set up in Bangladesh. Dhaka approved the onshore drilling contracts after almost two years of talks between Petrobangla and Gazprom.
Gazprom Signs an Initial Contract with Bangladesh to Explore Gas
22 January 2012