Shell Exploration BV has acquired a farmout of Bangladeshi exploration and production licenses operated by Cairn Energy plc, Edinburgh, for $130 million cash plus a $200 million work program.
The Shell/Cairn agreement will involve setting up a 50-50 alliance to bid for new acreage in Bangladesh, with Cairn acting as exploration operator and Shell acting as development operator.
The two companies will set up a 50-50 partnership for exploration and development in Bangladesh, including immediate transfer of one fourth of Cairn's assets there, among which is a 75% stake in Sangu gas field.
Included is an agreement under which either party can initially take a 25% share of any upstream, power, liquefied natural gas, middle distillate synthesis, or pipeline projects in Bangladesh. This share can later be expanded to 50%.
The Sangu gas find has estimated reserves of more than 800 bcf and is being developed under a novel strategic alliance between Cairn and Halliburton Co., Dallas.
Block 16 Sangu is being developed with a small production platform and an export pipeline to shore, with first gas due to be sold in Bangladesh in 1998 (OGJ, Aug. 5, 1996, p. 21).
The gas sales agreement with state firm PetroBangla provides for initial production of 160 MMcfd of gas, rising to 200 MMcfd within 1 year.
Cairn and Shell have also agreed to combine exploration and production activities in India, where Cairn has a 22.5% share and operatorship of Ravva oil field.
The companies are also negotiating a potential alliance to pursue new ventures outside Bangladesh and India.
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
