4:34 pm - Friday October 18, 8707

Bapex partners Santos in 1st offshore Block 16 venture

State-owned Bangladesh Petroleum Exploration and Production Co Ltd (Bapex) planned to venture into offshore petroleum exploration in Bangladesh for the first time after signing a preliminary deal with Australia’s Santos Ltd. earlier this week to drill an exploration well in Block 16.

“Yes, the agreement (with Santos) was signed and we are still talking to them about the drilling,” a Bapex executive told Rigzone.

Under the deal, the Bangladeshi company and Santos will carry out offshore drilling at the Block 6Magnama structure in the Bay of Bengal, Bapex Managing Director Md Atiquzzaman said, as quoted Tuesday in local daily Financial Express.

The agreement with Santos will give Bapex a 49 percent stake in offshore Block 16, which is currently 100 percent owned by Santos.

“It’s a 49:51 percent JV (joint venture),” the Bapex executive said in response to a query from Rigzone, adding that his company will hold the minority stake.

Santos and former partner in Block 16 Cairn Energy drilled the Magnama-1 prospect in 2007 and the former has plans to drill an appraisal well.

The Australian operator noted that 3D seismic acquired in the block in 2010 revealed “considerable gas potential in a number of leads over the Magnama structure. The Magnama prospect if proven to hold commercial volumes of gas could assist in providing much needed domestic gas to the Bangladesh market.”

“We are hopeful of having potential hydrocarbon reserves in Magnama,” Dr. Mahmudul Karim, Santos Bangladesh spokesman said at the signing ceremony, according to the Financial Express.

Karim expected work on the Magnama-2 well is expected to commence in February 2017, adding that necessary preparations such as the selection of a drilling contractor and the purchase of drilling equipment would be completed before that.

Santos has been looking for a partner to drill Magnama since it acquired Cairn Energy’s interest in Block 16 in December 2010.

Currently, Bangladesh’s natural gas production is provided by its onshore gas fields following the shutdown of the Santos-operated offshore Sangu gas field in October 2013.

Bapex produces approximately 105 million standard cubic feet per day from six onshore gas fields, accounting for 3.9 percent of Bangladesh’s total gas production as of June 29-30, according to data from Bangladesh Mineral Oil & Gas Corp. (Petrobangla).