Bangladesh
6 years ago

Hydrocarbon exploration: Santos, KrisEnergy carry out 3D seismic survey in block SS-11

Internet photo used for representation
Internet photo used for representation

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The joint venture (JV) of Australian Santos and Singapore's KrisEnergy carried out a 3D (three dimensional) seismic survey in block SS-11 in the Bay of Bengal to explore hydrocarbon.

The JV conducted the 3D survey recently covering some 305 square kilometre area in shallow water, a senior Petrobangla official told the FE.

Santos and Kris last year had carried out a 2D (two dimensional) seismic survey in 3,220 LKM (line kilometre) areas and identified some prospects that wooed the JV to carry out the 3D seismic survey.

The JV, however, did not mention the quantity of natural gas reserve in the shallow water block on the basis of the 2D survey carried out by France-based geosciences company - CGG.

The CGG carried out the survey for the JV firm at the cost of around US$ 9.76 million.

According to officials, on the basis of the 2D seismic survey output Santos subsequently drilled an exploratory well at Magnama gas field after establishing a JV with state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) without having any commercially viable resources.

Bapex had to pay Santos US$16.50 million as 'sunk cost' and $12.70 million as drilling cost for involvement with the JV with Santos to drill the offshore well.

Magnama is located within block 16 area where the recently closed Sangu-11 gas well is located.

Santos's predecessor Cairn Energy discovered natural gas in Magnama by drilling a single exploration well.

The JV of Santos and Kris committed to drill an exploration well, conduct 3220 LKM 2D seismic survey, 300 sq km 3D survey and offered a bank guarantee of US$15 million for exploring SS-11 during the initial five years of the production sharing contract (PSC).

The contract period for exploration will be eight years in total.

The JV would be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field.

The price of gas in Bangladesh is pegged to that of high sulphur fuel oil (HSFO) in the international market, while oil prices are determined as a fair market value agreed on by the companies and state-owned Petrobangla.

The PSC also allows the JV firm the right to full repatriation of profits, not pay any signature bonus or royalty on equipment and machinery imported for exploration, development and production.

Companies will also have 100 per cent cost recovery.

Contractor can also sell gas directly to third parties, subject to Petrobangla's right of first refusal. But hydrocarbons produced from the shallow water blocks must be sold in the domestic market as exports are prohibited under the PSCs.

Petrobangla's subsidiary, Bapex will have 10 per cent carried interest in the shallow water block.

Currently, Bangladesh is entirely dependent on onshore fields for natural gas output, with current production hovering around 2,700 million cubic feet per day (mmcfd) compared with the demand of more than 3,300 mmcfd.

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