Australian oil and gas exploration company Santos inked an agreement Monday with state-run Bangladesh hydrocarbon exploration company Bapex to carry out offshore drilling at the Magnama structure in the Bay of Bengal.
Bapex would now have the opportunity to carry out oil and gas exploration offshore for the first time under the JV with Santos, Bapex managing director Md Atiquzzaman told Platts Monday, boosting the Bangladesh's company technical know-how in offshore exploration.
Under the deal, Bapex will pay Santos US$16.50 million for entering the JV under a "binding offer agreement," Atiquzzaman said.
Santos will have 51% of the JV, with Bapex holding a 49% stake, he said.
Before the deal, Santos owned 100% of the Magnama structure after it bought Cairn Energy's interests in Bangladesh in 2010.
"We are hopeful of having a potential hydrocarbon reserve in Magnama," said Santos' Dr. Mahmudul Karim at the deal signing ceremony, adding that Santos hoped to start drilling the Magnama-2 well in February next year.
The drilling cost has been estimated at $26 million, with Bapex bearing $12.7 million of the expenses.
Bangladesh's entire natural gas production currently comes from onshore gas fields after the shutdown of the Santos-operated offshore Sangu gas field in October 2013.
The Magnama structure is in block 16, where the now-shut Sangu well is located.
Santos' predecessor Cairn discovered natural gas presence in Magnama, consisting of a number of stacked structural stratographic reservoirs, through a single exploration well around eight years ago.
Santos has been seeking a JV partner for drilling Magnama ever since it purchased Cairn's assets. It has another JV with Singapore's KrisEnergy covering exploration in shallow water in the Bay of Bengal in block SS-11.
Bapex has until now only drilled onshore gas wells, either at its own gas fields or ones owned by other state-run entities.
It has seven gas-producing fields across the country from which it produces around 105,000 Mcf/d against overall capacity of 143,000 Mcf/d.
Bapex's natural gas production is only 3.8% of the country's overall output of around 2.72 Bcf/d, according to Petrobangla data.
