Shell questions Unocal's 'assumptions' on Bangla gas

Vol 5, PW 21 (05 Dec 01) People & Policy

Unocal might be gung-ho about Bangladesh gas reserves and commercial prospects in an energy starved market like north India, but Shell does not share this enthusiasm.

"Unocal is telling everybody that Bangladesh gas is cheap," reveals a Shell source. "This is not the whole picture." Really What do you mean "You need more than 1,000 kilometres of pipeline to take this gas to markets in India.

Then you need separate production sharing contracts with Petrobangla." Shell is also concerned about reserve estimates. "Current known reserves are 13 trillion cubic feet.

Of these 3 trillion have been used up, leaving only 10 trillion cubic feet. We believe you need at least between 40 trillion to 50 trillion proven reserves for an export case scenario." Another Shell concern is price.

"Nobody is sure of the price. We feel it is premature to talk of markets before that." Shell also points to the cost of putting in place infrastructure to transport the gas to India.

"It could cost about $1bn to lay pipelines and other infrastructure. In such a situation LNG landed at Gujarat becomes as competitive as Bangladesh gas." Shells board of directors, we learn, is of the view that Bangladesh gas will not reach potential consumers in India for another six or seven years.

By which time other, equally competitive, sources would become available. Which is why Shell 'cooled off' and stopped drilling at its Sangu gas concession offshore Bangladesh sometime in August.

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