Shell Plans Big Entry Into Bangladesh

Royal Dutch/Shell Group, which abandoned Bangladesh in 1990, is returning with massive multi-billion dollar investment plans, but government officials say the petroleum giant has to get in line.

The new government of Sheikh Hasina, desperate to attract foreign capital, looks flattered by the move but not overwhelmed amid huge overseas response to recent natural gas finds. Energy minister Nooruddin Khan welcomed Shells interest in the countrys gas sector but refused to say that the company had assured access.

They are a big name. They are our old associate. We are happy that they want to come here again, but they have to come through a competitive bidding, Khan told Reuters in Dhaka.

 

Recent major gas finds are expected to create keen interest when 14 of the countrys total 23 exploration blocks are offered following pre-bid conferences in London and Houston in March.

Shell is seeking four blocks in the bidding.

Officials in the energy ministry said it is basically eyeing the Shahbazpur gas field in the coastal district of Bhola where state oil firm Petrobangladesh made a major gas find in 1995.

A company like Shell does not fear competition, Siraj-ud Dowla, Managing Director of the Shell Company of Bangladesh, told Reuters. Dowla said on Thursday that Shell has proposed to the government a $2.5 billion investment in a project to convert natural gas into petroleum products.

He said the plant could produce enough to completely replace the countrys entire imports of refined petroleum products for the next five to 10 years.

Bangladesh currently imports an average of 30,000 barrels of refined petroleum products a day, which cost the country around $300 million annually.

Shell also proposed a power generation unit.

Their (Shell) proposal is no doubt very attractive. We are taking it seriously, energy minister Khan said.

But their proposal is unsolicited like many other interested ones, and we shall ask them to participate in the bid which we are planning shortly.

A team from the Shell Exploration & Production International ventures from Holland and London visited Dhaka earlier this month and submitted the proposal to the energy ministry.

Shell has experience in discovering gas in eastern Bangladesh, but withdrew from the country in 1990 after failures in the north.

Britains Cairn Energy Plc has also discovered a huge gas field in the Bay of Bengal and is set to explore further. Cairn and US partner Halliburton Co plan to invest $235 million to jointly develop the Sangu field with the first production expected in 1998.

Three US companies Occidental, Rexwood & Okland and United Meridian have also entered into a production-sharing contracts with the government. Occidental is said to have agreed to invest $100 million in onshore gas development.

The gas would be used for producing fertilisers and electricity.

In January, Unocal said it would join Occidental and take 50 percent in the joint venture covering three million acres in the northeast.

Under the deal, the companies will explore and develop the Jalalabad field over the next two years with first production targeted for mid-1998.

Unocal expects natural gas demand in Bangladesh to more than double over the next 10 to 15 years. The countrys has proven reserves of 10.2 trillion cubic feet (Tcf).