Bangladesh Minerals, Oil and Gas Corporation (BMOGC) was established pursuant to President’s Order no. 27 of 26 March, 1972 for dealing with the exploration and development of oil, gas and mineral resources of the country. The activities of the Corporation relating to minerals was segregated and placed under a new organization named Bangladesh Mineral Exploration and Development Corporation (BMEDC) formed by President’s Order no. 120 of 27 September, 1972. The reconstituted Bangladesh Oil and Gas Corporation (BOGC) was short-named “Petrobangla” by Ordinance no. XV of 22 August, 1974. Through the repeal of Ordinance no: LXX of 1974, Oil and Gas Development Corporation were abolished and all its assets and liabilities were vested in Petrobangla. On 13 November, 1976, by promulgation of the Ordinance # 88, the import, refining and marketing of crude and petroleum products were separated and vested with the newly-formed Bangladesh Petroleum Corporation (BPC).
BOGC and BMEDC were merged into a single entity under the name “Bangladesh Oil, Gas and Mineral Corporation (BOGMC)” by Ordinance no. 21 of 11 April, 1985. The Corporation was short named “Petrobangla” and given power in Act XI of February, 1989 to hold shares or interest in any company formed for the purpose of exploration and exploitation of oil, gas and mineral resources.
The search for oil and gas in the area constituting Bangladesh began in the later part of the 19th century through some isolated geological mapping. The first serious attempt to find oil and gas was undertaken in Sitakund in 1908 by the Indian Petroleum Prospecting Company, 18 years after the first oil discovery in Digboi, Assam. During 1923-31 Burmah Oil Company (BOC) drilled two shallow wells in Patharia. The wells were abandoned though there was a reported show of oil. A total of 6 exploratory wells were drilled, the deepest being 1047 meters. There was, however, no discovery and the Second World War disrupted further activities.
The interim: 1948 to 1971
The promulgation of Petroleum Act in 1948 generated a lot of interest in oil and gas exploration by international oil companies. The Standard Vacuum Oil Company (STANVAC) of USA, Pakistan Petroleum Ltd. (PPL), Burmah Oil Company affiliate and Pakistan Shell Oil Company (PSOC) carried out exploration till the end of the sixties. STANVAC drilled 3 wells at Hazipur, Bogra and Kuchma in the north-western part of the country without success. PPL drilled wells in Haripur, Patharia, Chhatak, Fenchuganj, Patiya and Lalmai and made the first gas discovery in Haripur in 1955, followed by Chattak in 1959. PSOC was the most successful company and discovered 5 gas fields named Titas, Habiganj, Rashidpur, Kailashtila and Bakhrabad. They also drilled the first offshore well Cox's Bazar-1, which was dry.
Oil and Gas Development Corporation (OGDC) was established in 1961 providing an institutional foundation for exploration of oil and gas in the country. OGDC carried out geological and geophysical surveys including gravity, magnetic and seismic types and drilled wells in Jaldi and Semutang, discovering gas in Semutang in 1970.
The way forward: 1972 to 1979
After the independence of Bangladesh, exploration activities by both national and international companies gathered pace. Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) continued its exploration efforts while the Bangladesh Petroleum Act was passed in 1974 to facilitate international participation under Production Sharing Contract (PSC). The offshore area of Bangladesh was divided into 6 blocks, which were taken up by Ashland, ARCO, BODC (Japex), Union Oil, Canadian Superior Oil and Ina Naftaplin under PSCs. These companies carried out gravity, magnetic and seismic surveys (about 32,000 km) and drilled 7 wells. Of them, only Union Oil Company discovered an offshore gas field Kutubdia in 1977. This phase of PSC ended in relinquishment of the blocks by the PSC operators in 1978. On 9 August, 1975, Government led by the Father of the Nation Bangabandhu Sheikh Mujibur Rahman purchased five gas fields, namely Titas, Habiganj, Rashidpur, Kailashtila and Bakhrabad from British company, Shell Petroleum Company Limited, for a nominal amount of 4.5 million pound sterling. This landmark decision taken by the then Government laid the foundation of energy security of the country by introducing sole ownership of the state over these major gas fields.
Gathering momentum: 1980 onwards
The 1980s saw accelerated exploration activities by Petrobangla. During the time, 12 exploration wells were drilled at Muladi, Begumganj, Singra, Beanibazar, Atgram, Feni, Fenchuganj, Sitakund, Bogra, Kamta, Marichakandi (Meghna) and Belabo (Narshindi); and 7 gas fields were discovered at Begumganj, Beanibazar, Feni, Fenchuganj, Kamta, Marichakandi (Meghna) and Belabo (Narshindi). Among these, Fenchuganj # 2 well remains the deepest one drilled so far in Bangladesh (4,977m). Meanwhile, a new milestone was achieved when Petrobangla discovered the first commercial oil pool in Sylhet # 7 on 23 December, 1986. Since 1989, after the formation of BAPEX as the national exploration company and thereafter exploration and production company, the company has continued exploration and production activities and drilled 4 exploratory wells discovering gas at Shahbazpur, Saldanadi, Srikail and Sundalpur.
In 1981 Shell Oil Company (Shell) was awarded the Chittagong Hill Tracts for petroleum exploration under PSC. Shell conducted geological and seismic survey and drilled the Sitapahar well which was dry. Subsequently Shell undertook exploration in the extreme North West of the country and drilled the first well in the area - the Salbanhat well which was also dry. In 1988 Scimitar Exploration Limited was awarded another PSC of what is now block # 13 in the Surma basin. They failed to prove the extent of the oil discovery at Sylhet structure but discovered the Jalalabad gas field.
Formulation of National Energy Policy, 1996 and adoption of a model production sharing contract (PSC) document together with redefining the whole of Bangladesh territory into 23 exploration blocks ushered in a new phase of exploration and development of oil and gas in the country. In the first stage under the new arrangement, 8 blocks were awarded to 4 companies under PSC. Exploration and development activities in these blocks were rather limited and most of the blocks were moderately covered by seismic surveys. A total of 11 exploration wells were drilled and 3 gas fields were discovered in these blocks. These fields are Moulavibazar, Sangu (offshore) and Bibiyana. These 3 fields alongwith Jalalabad gas field discovered by Scimitar Exploration Ltd. were developed under PSC and are currently in production. The first 3D seismic survey of the country took place in Bibiyana during its appraisal. Bibiyana came under production in March, 2007. Another PSC bidding round during the late nineties culminated in awarding 4 more blocks. These were SHELL/CAIRN/BAPEX in blocks # 5 and 10, UNOCAL/BAPEX in block # 7 and TULLOW/ CHEVRON/TAXACO/BAPEX in block # 9. Exploration activity was conducted in these blocks. Substantial activities were undertaken in block # 9 only, where 5 exploration wells were drilled on the basis of seismic survey including 3D seismic.
The Offshore Bidding Round 2008 being limited to newly-formed deep water blocks, attracted some bids. However, the ensuing maritime boundary dispute in most of the blocks created a stalemate. In this backdrop, two blocks were negotiated with Conoco Phillips and a PSC for two blocks was signed in 2011. Conoco Phillips completed the initial seismic survey in the blocks. They relinquished these blocks in 2014 without drilling any exploratory well.
After the resolution of the Maritime boundary dispute with Myanmar by virtue of the judgment awarded on 14 March, 2012 by International Tribunal for the Law of the Sea (ITLOS), the deep water blocks on the eastern part were rearranged. This is a widely acclaimed achievement of the Government led by Hon`ble Prime Minister Sheikh Hasina. The Bangladesh Offshore Bid Round 2012 was announced in December, 2012 and substantial initial response was received. Under this Bid round, three shallow water PSCs have been signed with ONGC Videsh, Oil India & BAPEX for blocks SS-04 and SS-09 and Santos, Kris Energy and BAPEX for block SS-11. Deep water bids, received in January, 2014, are now being processed. Since the signing of the PSC's, several changes in ownership and restructuring in the contracts have taken place. All of the onshore PSC's have matured from the exploration phase to the production phase and major areas of the blocks have been relinquished. As of December, 2014 PSC's are active in production areas of blocks 12, 13 and 14 (Bibiyana, Jalalabad and Maulavibazar Gas Fields) operated by Chevron.
Even though exploration history of oil and gas in Bangladesh goes back almost a century, exploration density could not be enhanced as much it is required to convert domestic oil and gas resources into proven reserves. However, the exploration success ratio is high as of about 1 in 3 wells. PSC explorations were also contributing to the enhancement of gas production. As of December, 2014 out of 26 gas fields discovered, 19 were under production. Meanwhile, peak gas production per day crossed the level of 2,600 MMCFD wherein average daily gas production remained more than 2,500 MMCFD by December, 2014. Despite increase in production, the rising demand could not be met and the gap between supply and demand is widening. As such the government has taken steps to import LNG to minimize the gap.
Petrobangla is also entrusted with mineral development in the country. While the exploration part of minerals activity falls under the charter of Geological Survey of Bangladesh (GSB), subsequent development of economic deposits are undertaken by Petrobangla. Mineral activities were part of the erstwhile Bangladesh Mineral Exploration and Development Corporation (BMEDC) till its merger with BOGMC. Petrobangla has developed two underground mines, one for coal at Barapukuria which started commercial production in September, 2005 and the other for Granite at Maddhapara which went into commercial production in May, 2007. Certain other extraction operation, like limestone, white clay and boulder, are controlled by the government through the Bureau of Mineral Development (BMD).
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