The Cabinet Economic Affairs Committee on Wednesday in principle approved a proposal to allow state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) to sign a ‘Sale and Purchase Agreement (SPA)’ with Australian oil company Santos for offshore gas exploration under a joint venture.

The proposed BAPEX-Santos joint venture will explore gas in the country’s Magnama offshore gas structure located in Block-16.

The Cabinet body, in a meeting with Finance Minister AMA Muhith in the chair, gave the go-ahead to the proposal placed by the Energy Division. Senior ministers who are members of the committee were present at the meeting, reports UNB.

Energy Division officials said under the SPA, BAPEX will obtain a 49 percent stake in the joint venture with Santos for Magnama structure by paying $28.85 million by January 31 while Australian company will hold the remaining 51 percent stake.

This SPA has been a follow-up step towards forming a joint venture as Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) and Santos had earlier signed a ‘binding offer agreement’ in June last in this regard as an initial deal.

The Magnama structure was discovered a few years ago by foreign oil company Cairn Energy, but it was not fully explored by drilling adequate number of wells.

Later, Santos acquired Magnama gas field from Cairn Energy which had drilled an exploration well in 2007-08, and subsequently carried out 213 line kilometres of 3D seismic survey in early 2010. After taking over the field, Santos has now moved to conduct further drillings under the deal with BAPEX.

Petreobangla officials said working with Santos in Magnama field will be a new experience for BAPEX as it had never worked in any offshore gas field. They said BAPEX, a subsidiary of Petrobangla, had a good experience to conduct exploration and production work in the onshore field, not in the offshore one.

They also noted that if exploration activities become successful in Magnama, it will be the 2nd offshore field of the country. Earlier, Sangu gas field was the first offshore gas field located in the same block of 16. But Sangu’s operation was shut down following its depletion in October 2013.

Currently, Bangladesh’s entire natural gas production comes from onshore gas fields.

Bangladesh has been experiencing gas shortage of about 500 mmcfd as the country produces about 2700 mmcfd against a demand for 3200 mmcfd.

Meanwhile, the Cabinet Economic Affairs Committee also approved two more proposals of the Water Resources Ministry.

Officials said the ministry in one proposal sought approval for awarding contract through direct procurement method (DPM) to selected contractors for construction of embankment in Mirrsharai economic zone area in Chittagong.

The other proposal is to award contract through DPM for the development of water drainage system in Dhaka-Narayanganj-Demara (DND) area for resolving waterlogging there.

Besides, the Cabinet Purchase Committee in other meeting approved three proposals, including import of 50,000 tonnes of fertiliser and appointment of a consultant for e-GP system in the country.

As per the proposal of the Agriculture Ministry, the Bangladesh Agriculture Development Corporation (BADC) will import 25,000 tonnes of TSP fertiliser at a cost of Tk 53.74 crore from state-owned OCP of Morocco under the government-to-government agreement.

Under other proposal, the BADC will import 25,000 tonnes of TSP fertiliser from Groupe Chimique Tunisien (GCT) of Tunisia under a similar agreement. The import will cost Tk 55.48 crore.

Implementation, Monitoring and Evaluation Division (IMED) will appoint GSS Infotech, India and its nominated sub-consultant Dohatech New Media, Bangladesh as a consultant for e-GP system at a contract value of Tk 21.85 crore.