Preparation is on stream to award a liquefied natural gas (LNG)-supply contract to a truant foreign firm that had previously left Bangladesh without completing a contracted drilling job, sources say, stoking fresh concerns.
Energy-industry insiders say the move towards deal-making with Socar, an Azerbaijani company, has triggered unease, given the firm's controversial track record in the country's oil and gas industry.
State-run Petrobangla is currently negotiating with Socar to select it, without a competitive tender, for LNG supply to Bangladesh for the first time, a senior Petrobangla official told The Financial Express on Tuesday.
Critics fear the decision could expose the country to renewed contractual and supply risks amid an already-strained gas market.
Socar earlier won a three-well drilling contract from Petrobangla's subsidiary, Bangladesh Petroleum Exploration Company (BAPEX), but allegedly completed only one-third of the works before leaving the country.
Industry insiders describe it as the first instance in Bangladesh's oil and gas sector where an international oil company abandoned an assigned drilling job midway.
In 2017, BAPEX awarded Socar a contract worth around US$33 million to drill three onshore gas wells -- Semutang South-1, Begumganj-4 and Madarganj-1.
However, the company drilled only the Semutang South-1 well and left Bangladesh after receiving about US$11.8 million, officials said.
The Azerbaijani firm did not proceed with drilling the Begumganj-4 well in Noakhali or the Madarganj-1 well in Jamalpur district.
Instead of compensating BAPEX for failing to fulfil its contractual obligations, Socar reportedly filed a lawsuit against the state-run explorer at the Singapore International Arbitration Centre (SIAC), allegedly exploiting loopholes in the contract.
As a result, Bangladesh could incur losses of around US$42 million, according to a senior Petrobangla official.
He alleges that Socar, in connivance with its local partner, is set to gain windfall profits without completing the agreed drilling works.
"If Socar is awarded an LNG supply deal, Petrobangla may again face a situation where contractual obligations are not honoured, further aggravating the already-strained gas supply across the country," the official warns.
If selected, Socar would be required to supply around half a dozen LNG cargoes annually.
And Bangladesh will have to pay around US$240 million to the supplier to buy the gas cargoes, if the deal is finally awarded, said the Petrobangla official
At present, Bangladesh imports the liquefied gas under long-term contracts from QatarEnergy LNG (formerly Qatargas), OQ Trading International and US-based Excelerate Energy. The country also imports LNG from OQ Trading International under a short-term arrangement.
Energy-expert Prof M Tamim says Socar should have been penalised for leaving Bangladesh without completing its drilling commitments.
"The company should have been blacklisted from undertaking any work in Bangladesh for such misconduct," he adds.
Professor Tamim, who is currently Vice-chancellor of the International University, Bangladesh (IUB), alleges that Socar is now attempting to secure the LNG contract posing as a Switzerland-registered entity.
This company is using unfair means to obtain the contract, he claims.
Azizjst@yahoo.com
