For the first time in its history, the much-ignored national oil and gas exploration company BAPEX is being awarded more than eight projects to increase natural gas supplies within a short time.

Besides, the government plans to devise a new price formula for gas produced by BAPEX to enable the company to make profit.

“The new prices will cover BAPEX’s investment in a gas field and add another 15 per cent cost as overhead expenses. These prices will be independently applied to each of BAPEX’s gas producing wells,” said a highly placed energy ministry source.

While international oil companies get close to three dollars (around Tk 200) per thousand cubic feet (mcf) gas, BAPEX gets an unrealistic low price of Tk 7 per mcf, the government’s bulk sale price of gas is Tk 115 per mcf.

Since its inception in 1989, BAPEX was hardly given any project to help the company grow. Due to sparse and irregular approval of exploration and development projects, BAPEX has only a couple of producing gas wells which supply only 31 million cubic feet per day (mmcfd) gas.

But now, the government is processing a number of projects for BAPEX. These include developing the Semutang, Begumganj and Shahbazpur gas fields and drilling exploratory wells in Kapatia, Srikail and Sundalpur gas structures.

The government is also considering drilling of two development wells in Salda river gas field.

In addition, Bapex has received allocation under the Annual Development Programme (ADP) to purchase a drilling rig. It has been awarded the job of conducting three dimensional seismic survey in six gas fields of Bangladesh Gas Field Company Ltd (BGFCL) and Sylhet Gas Field Ltd (SGFL), conducting regular seismic survey in Mobarkpur and Netrokona, and undertaking drilling and workover of wells belonging to national gas production companies.

BAPEX was formed out of the exploration wing of Petrobangla following the advice of a World Bank consultant in 1989. The consultant’s original recommendation was forming a single company to oversee exploration and production of oil and gas. But the Ershad government formed the exploration unit BAPEX and separate production companies BGFCL and SGFL on narrow political grounds, sources said.

“The government decision to make exploration and production units separate is the root of all problems for BAPEX because its own revenue generation system was not established back then. This has de-linked BAPEX from operating on a commercial basis,” noted a BAPEX official.

Later, when BAPEX started raising questions about its revenue, Petrobangla made a makeshift arrangement to provide two percent of its total revenue to BAPEX for staff salaries and other basic overhead costs. BAPEX was given several ring-fenced gas structures in the late nineties, without any basic investment to utilise these assets. It was made a full-fledged company a few years back but is yet to be given a basic investment or a financial goal, or a financial structure that would help it grow.

NEW PROJECTS

While the past governments sat on a number of proposals of BAPEX, the caretaker government has approved some of these, and is seriously considering approval of some vital projects that would help enhance overall gas supplies in the country.

The energy ministry is reviewing the Semutang field development proposal which aims at production of gas from June 2009. Located in Khagrachhari, this field would probably produce about 30 mmcfd gas at a cost of Tk 65 crore.

BAPEX, under a joint venture with BGFCL and SGFL, would develop Begumganj field in Noakhali under a self-financed project worth Tk 205 crore. Initially, this field would produce 20 mmcfd gas. It has already received the finance ministry’s clearance.

The company would drill an exploratory well at a cost of Tk 58 crore in Kapatia. This government-funded project is awaiting clearance from the Executive Committee of National Economic Council (Ecnec).

BAPEX is now estimating the project cost for re-exploring Srikail gas structure where it had previously drilled a well at a wrong place. It aims at drilling a new well in this area in 2008.

Under a Tk 67 crore project, Bapex may drill a well in Sundalpur, close to Begumganj, in 2010.

The company is also planning to drill two new wells in Salda river gas structure.