Energy Bangla - Chevron to Hunt Gas in Block 7 in April as Govt Okays $53m Investment Plan

International oil giant Chevron would launch gas exploration activities in hydrocarbon-rich southern Bangladesh next month after state-run Petrobangla endorsed its plan to invest US$53 million in new discoveries, officials said Sunday.
The second largest US oil company, which accounts for some 40 per cent of the country's gas production, will conduct a two-dimensional (2-D) survey as part of its hunt for natural gas in Block-7 encompassing Barisal , Patuakhali, Jhalakathi and Pirojpur districts.
"The company (Chevron) has presented an investment plan, justifying their expenses. We've approved it," Md Muqtadir Ali, a director with Petrobangla, told EB.
The approval would allow Chevron to invest in the seismic survey, which is essential for locating gas reserve, he said adding the company would also spend part of the amount in installing gas compressor.
Besides the survey, company officials said the capital investment would also go into land acquisition and drilling as it geared up for a major new exploration work after years.
Last year, California-based company with annual revenue of US$265 billion posted $23.93 billion net profit, compared to $18.69 billion in 2007. Sales and other operating revenues also rose 19 per cent from $214 billion in 2007.
Its Bangladesh affiliate said it submitted the proposal to the Bangladesh Oil, Gas and Mineral Corporation or Petrobangla last September and the Petrobangla officials had to scrutinize the expenses before giving the go-ahead.
"The company will not only conduct the survey, but also drill in potential sites this year," a senior Petrobangla official said, adding the survey may prove critical as the world's largest mangrove forest Sundarbans fall partly under the purview of the survey.
"There may be multiple implications. The area is huge spanning more than 460 kilometres," the official added.
A Chevron official said the approval would pave the way for the survey and exploration activities 'at the soonest possible time.'
The official said that Chevron, which has right to explore minerals in Bangladesh's three blocks including block-7, also submitted the operational budget of $67 million for the year along with the capital investment plan.
Gas output by international oil companies (IOCs) accounts for 968 mmcfd or 51.46 per cent of the total generation from 18 fields across the country, with the rest 912 mmcfd being generated by state-run companies.
Chevron which took over Unocal's operations in Bangladesh alone accounts for 80 per cent of the IOCs' total daily production with its giant Bibiyana gas-field feeding more than 25 per cent of the country's daily gas supply.
Chevron officials said that the company expects to begin the survey sometime next month.
A Petrobangla official said Chevron is obliged to drill an exploratory well in the block area by 2011 in the light of the production sharing contract (PSC).
He said the seismic survey would cover both onshore and offshore areas, even up to 20 kilometers of the Bay of Bengal . The company's future investment for exploration of hydrocarbon would be contingent on the survey results.
Its investment plan comes at a time when the country reels under severe gas shortage, with Chittagong-based industrial units feeling the main squeeze. Production at manufacturing plants located in and around Dhaka is also being disrupted due to gas scarcity.
Businessmen said a slew of projects are put on hold in Dhaka and Chittagong owing to the shortage of gas supply.