Russia’s Gazprom to get more work without tender

    Originally published in Prothomalo on 13 July 2023

    Russian state-owned company Gazprom is going to receive the drilling work of five more gas wells without any tender. The Russian firm may also secure the drilling work at the gas fields discovered by Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) in Bhola.

    Added to this, Gazprom may receive work on gas exploration and the company has been in talks with the government on this matter.

    A company is offered work without a tender under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, which is known as the indemnity act. Yet once the government hands Gazprom the gas drilling work instead of BAPEX, the cost will double.

    To date, BAPEX has discovered three gas fields in Bhola district, which are in Shabazpur, Bhola North and Ilsha. Two wells will be drilled in Shabajpur and Bhola North each and these four wells will be development wells, which is drilled to start gas extraction. Other than these, an exploratory well will be in the middle of these two gas fields. Process are being finalised to give the drilling work of these five gas wells to Gazprom.

    According to sources at Petrobangla (Bangladesh Oil, Gas and Mineral Corporation) and BAPEX, the government has undertaken projects to drill 46 wells in three years to enhance gas exploration. Since it may take more than 10 years for BAPEX to drill these wells, work is being offered to Gazprom.

    The sources further said Gazprom has collected all necessary information from BAPEX to drill these wells and the Russian company will offer a tender after analysing the data. After that, the BAPEX will negotiate the price with Gazprom and inform the Petrobangla. The Energy and Mineral Resources Division will finalise the offering of work to Gazprom after reviewing everything and it may take two months altogether.

    Speaking to Prothom Alo, Md Shoyeb, managing director (current charge) of BAPEX, said there is an urgent necessity of gas in the country. All of BAPEX’s drilling rigs are in operation and gas well is being drilled in parallel by the Gazprom to increase gas supply quickly.

    According to BAPEX sources, they spend highest Tk 800 million per well for drilling. On the other hand, Gazprom took more than Tk 1.80 billion per well for drilling three gas wells in 2020 and the Russian company secured drilling work of all gas wells without tender.

    Speaking to Prothom Alo, Petrobangla chairman Zanendra Nath Sarker said contractors are being appointed in addition to utilising the full capacity of BAPEX. A committee will be formed soon to negotiate price with Gazprom and it will not take long to make a deal.

    Deal is being signed under the Special Provisions to increase gas supply; however, price will be finalised after scrutinising everything, he added.

    The Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act was formulated in 2010. Experts said companies are offered work in power and energy sector without competitive tender, resulting in rise in cost and liability on consumers. On the other hand, there was no attention on drilling well in the country because of giving focus on import, but import is difficult now due to the dollar crisis and the rise in global price. That is why the drilling work is being offered without tender on the ground of expediting gas supply. There is another allegation, which is the government tends to offer work to foreign companies instated of making investment to increase the capacity of BAPEX.

    Gazprom involved in gas exploration

    Gazprom has been working as a contractor firm in Bangladesh for a decade. The Russian company first received work on drilling 10 gas wells in 2012, which increased to 20 later. This time, Gazprom is exploring gas in a gas-sharing partnership with the government. The Russian firm signed two memorandums of understanding (MoUs) with Petrobangla and BAPEX separately. Gas will be shared under these MoUs and talks are underway to make deal on it.

    The government follows the Offshore Model Production Sharing Contract 2019 to explore gas and oil in partnership with foreign companies. Under the PSC, the government and the respective company share the extracted gas, and again the government purchases the portion of the foreign company’s gas at a specific price. Work on finalising a new draft of this contract is underway aimed at exploring for offshore gas.

    Gazprom may be offered gas exploration work without tender under the Special Provisions; however, the matter is yet to be finalised.

    According to Petrobangla sources, Gazprom will drill development and exploration wells in Bhola gas fields under its MoU with BAPEX. On the other hand, Gazprom’s MoU with Petrobangla is a strategic one, and under which, the Russian company is supposed to explore offshore and onshore gas. Initially, Gazprom expressed interested on gas exploration in Bhola and prosed to build a pipeline to supply gas from Bhola.

    Geologist Badrul Imam told Prothom Alo work on gas exploration can be offered without tender on various considerations. However, it is not logical to appoint a foreign contractor to drill gas well in the gas fields discovered by BAPEX, and it will cost more than double and this is also against national interest.

    BAPEX did the hard part, the discovery of gas field, so it is not a matter at all for BAPEX to drill development wells. BAPEX will be capable to drill too, he added.