Unocal, Ongc Join Hands To Bid For Tripura Gas

Global oil major Unocal Corporation is planning to form a joint venture with the Oil and Natural Gas Corporation (ONGC) to bid for gas exploration blocks in Tripura. The two companies have signed a memorandum of understanding (MoU) for the purpose.

Unocal which has discovered large quantities of gas in Bangladesh wants to swap the Tripura gas and Bangladesh gas between the countries. The plan is to supply Tripura gas to Bangladesh and Bangladesh gas to India. This could be done through a subsea or onland pipeline.

The swap has become necessary in view of Bangladeshs reluctance to sell its gas to India. It claims it would require all its gas for internal use. Though Unocal holds a large equity in the gas fields discovered in Bangladesh. As per the production sharing agreement between the US multinational and the Bangladesh government, the government has the first charge on the gas.

However, Unocal is more keen on entering the Indian gas market in view of the huge requirement for energy in the country. According to official estimates, against the registered demand of 95 million standard cubic metres per day (mmscmd) of gas in India, the total supply is only 63 mmscmd. This demand is expected to touch 180 mmscmd in the year 2005.

Unocal is confident of finding gas in Tripura since it is in the same geological strata as Bangladesh. In case it finds gas in Tripura, the same can be supplied to Bangladesh from the latters eastern borders and a similar quantity of gas can be piped from Unocals gasfields in Bangladesh to India through the subsea pipeline.

Though Unocal can go it alone while bidding for exploration blocks in Tripura under the new exploration licensing policy (NELP), it wants to tie up with ONGC for strategic reasons. Unocal is of the opinion that ONGC has experience of working in the region and is well aware of its geological structures.

Moreover, Unocal would avoid bringing its own workforce and would like ONGC to utilise its own workforce for the exploration activity in view of the uncomfortable law and order situation in the state.

Unocal would like its Bangladesh-India pipeline to be joined by a gas pipeline from Myanmar which is planned to be laid by a consortium of the Gas Authority of India Ltd (GAIL), Brown and Root, Cairn Energy and Shell. The consortium is planning to bring in 28 mmscmd of natural gas from Myanmar.

Unocal is of the opinion that in case the Myanmar pipeline is joined with the Bangladesh-India pipeline, it would provide economies of scale and would be benficial to all the investors. Later, if need be, Unocal can transport its gas from its fields in Myanmar to India through the same pipeline.

Unocal had signed a farm-in agreement in 1996 that gave the company a 50 per cent working interest in a production-sharing contract convering three million acres in Northeast Bangladesh. Its three blocks include the Jalalabad natural gas field. The joint venture has a sales contract for initial delivery of 100 million cubic feet per day of gas beginning mid-1998.

In Myanmar, Unocal and its partners have discovered two potentially significant gas bearing sand structures adjacent to the famous Yadana field.

The company and its partners are evaluating the commercial viability of these two offshore discoveries. Unocal has a 28.26 per cent working interest in these two discoveries.