The government on Sunday signed an amended production sharing contract with UK-based Cairn Energy and its partners for the block 16, allowing the companies to sell gas directly to a third party from the newly found structures in the block.
The government for the first time took such a decision to allow any international oil company to sell gas to a party other than Petrobangla bowing to the pressure of Cairn and its partners.
Cairn had earlier warned that they would not go for further exploration in the block if they were not allowed to sell their share of gas to any third party, officials said.
Energy division deputy secretary AK Mohiuddin Ahmed, Petrobangla secretary Imam Hossain, Cairn managing director Fhil Dolan, Cairn’s partner Santos’ representative John Chamber and Halliburton representative Sawkat Hossain signed the agreement on behalf of their respective sides.
‘This is the third amendment to the original PSC between the parties which was signed in 1994. The current amendment will allow Cairn and its partners to sell their share of gas directly to any third party, instead of Petrobangla, within Bangladesh,’ said a Petrobangla official.
He said that Cairn would go for further exploration works including 3D seismic survey and drill exploration wells to determine the gas reserve in Magnama structure.
Cairn, which currently extracts gas from offshore Sangu gas field in block 16, struck in 2008 a structure in Magnama in the block that might have gas reserve, but halted further exploration demanding that the government allowed the company to sell gas to third party claiming that it would not be ‘economically viable’ to sell gas to Petrobangla as per the PSC.
The PSC had allowed Cairn to sell gas to Petrobangla at a rate of around $3 per unit.
Sources in Petrobangla said that Cairn pressed for allowing it to sell gas to third party after Karnaphuli Fertliser Company expressed interest in installing the second unit of the fertliser plant and Korean Export Processing Zone also expressed interest in buying gas at higher price.
‘We have allowed Cairn to sell its share of gas to any third party as Chittagong area was facing gas shortage and the company will sell gas to industries in the area,’ said a petrobangla official.
Rights groups and energy experts, however, criticised the government move to allow third-party gas sales while the state-run power and fertiliser plants were facing gas shortage.
‘It is a suicidal move as Petrobangla will not be able to prioritise where it will sell gas. Cairn has been given the authority to decide where it will sell its gas at a price fixed by the company,’ said an expert.
Member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, Prof Anu Muhammad, earlier said that a clique in the energy division took the decision to allow Cairn third-party gas sales to favour the company.
‘The decision will benefit the company and harm the energy sector. Private industries will be forced to buy gas at higher prices from Cairn. Other oil companies will also jump into action for taking such benefits,’ he said.
