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Cairn Energy Launches Hunt for More Oil and Gas Strikes Edinburgh- Based Explorer Has Identified Possible New Gas Field Off Bangladesh

Posted on: Monday, 23 January 2006, 09:00 CST

By KARL WEST CITY EDITOR

CAIRN Energy, the Edinburgh-based oil and gas explorer, last night announced thaty it would launch further exploration and development drilling in Bangladesh's offshore gas field.

Sir Bill Gammell, chief executive of Cairn and a former Scotland international rugby player, was in Bangladesh over the weekend on a three-day visit.

He said: "Now we are seeking approval from the government to begin offshore drilling at the end of 2006.

"We are reviewing to increase production from the Sangu field and block 16 as a whole."

The FTSE-100 oil explorer is operating Bangladesh's only offshore gas field at Sangu in the Bay of Bengal. It is also actively exploring in blocks 5 and 10, where new seismic data has been acquired, and is working with US oil giant, Chevron in block 7, where a seismic campaign started recently.

Gammell added: "The result of the survey has been encouraging."

It has identified a possible new gas field at Char Jabbar under Noakhali district in block 10 with an indiation of 2.8 trillion cubic feet of gas reserves.

Cairn has also conducted seismic surveys at Meghnama and at Hatiya under block 16. The possible gas reserve would be 3.5 trillion cub ft at Meghnama and 1.8 trillion cub ft at Hatiya, a senior Cairn official said.

The Scottish company has been in Bangladesh for more than 10 years and, along with its joint venture partners, has invested dollars-575m.

The official said that Cairn would invest another dollars-50m in 2006/07.

Cairn holds a 90-per cent interest in blocks 5 and 10, while the remaining 10-per cent is with the state-run Bangladesh Petroleum Exploration and Production Company.

It also holds a 45-per cent interest in block 7, which is operated by Chevron.

The Sangu field, which has the capacity to produce up to 180 million cub ft of gas per day, currently supplies up to 170 million cub ft of gas daily to the national grid.

The field was discovered in February 1996 and went into production in June 1998.

Bangladesh has 15.33 trillion cub ft of proven and recoverable gas reserves based on current estimates, according to energy officials in the country.

Earlier this month, Cairn flagged higher profits for 2005, thanks to higher oil prices and volumes.

The rise of Cairn has been remarkable, with most of its market value based on the 2.5 billion barrels of oil it has found in Rajasthan, rather than its producing fields offshore India and Bangladesh.

The Rajasthan discoveries have helped propel the company from one of the UK's smallest oil firms to the blue chip FTSE-100 index in just two years.

In addition, a delegation of officials from the Indian petroleum ministry have visited Aberdeen to explore the possibilities for Indian companies buying assets in the North Sea.

Speaking to India's The Economic Times, Shivendra Singh, country manager (India) for Scottish Development International, said: "In a bid to increase co-operation between India and Scotland in the energy sector, an Indian delegation has been invited to Aberdeen. One-on-one talks between oil companies on both sides will open up possibilities of co-operation."

He said that Scottish companies were open to offering stakes to Indian oil companies for buying assets in the North Sea.

Singh added: "We are organising an on-site visit for the officials visiting. The initial stages of discussions for possible collaboration in upstream and downstream activities will begin."

Energy security is at the top of the agenda for the Indian government, so North Sea oil reserves could be seen as attractive. Singh said remaining North Sea reserves are estimated to be around 2 billion tonnes.

Source: Herald, The; Glasgow (UK)

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