Vol 3, PW 4 (17 Mar 99) Midstream & Downstream

Interesting, therefore, to learn that the principle movers behind importing Bangladeshi gas to India - Cairn, Shell and Unocal - are in talks to provide a gas-fired power infrastructure solution for Khulna, the third largest city in Bangladesh, with a population of approximately 600,000.

Khulna, located in south-west Bangladeshi, is geographically closer to Calcutta than it is to the Bangladeshi capital, Dhaka. It is not inconceivable, therefore, that one day the gas that fires power stations in the power-starved Khulna region could eventually find its way across to an equally gas-hungry India via the pipeline envisaged by Unocal in Project Energy Renaissance.

All three companies would naturally wish to keep such scandalous suggestions away from the ears of a sensitive Bangladeshi government. Cairn for example is keen to stress that the present talks are preliminary, and focus on Bangladesh - only(!).

What is more surprising, however, is that Unocal, Shell and Cairn are talking at all, given the acrimony that surrounded the award of exploration acreage in Bangladeshs Second Licensing Round. Block 10, the most promising of the concessions on offer, was last month formally awarded to the Cairn/Shell alliance, despite the fact that Unocal also bid and believed it had an inalienable right to the concession because of its agreement with Bangladesh to develop the discovered Shahbazpur field which lies inside Block 10.

In the event, Unocal was awarded Block 7, a less promising prospect, but which nonetheless runs contiguous to Shell and Cairns Blocks 10 and 5, making an alliance between the three companies an obvious solution.