A Scottish independent and a U.S. petroleum service company have agreed to produce Bangladesh's first offshore gas under a novel strategic alliance accord.
Cairn Energy plc, Edinburgh, and Halliburton Co., Dallas, have signed a strategic alliance "contract-to-produce" gas from Sangu field on Block 16 off Bangladesh.
Halliburton will acquire a 25% interest in the block from Cairn in return for funding 50% of initial development costs.
Cairn currently holds a 100% interest in the block.
To pay for its share of Sangu development and for further exploration, Cairn plans a public share offering to raise 50 million ($75 million).
First production from Sangu is expected to reach the Bangladesh market in 1998. Cairn envisages a small platform over a drilling template, with an export pipeline to shore.
Separately, Cairn and Halliburton signed an agreement that could widen the scope of their cooperation outside Sangu. This includes a possible regional pipeline.
The field's discovery well, 1 Sangu, tested gas from two zones at a rate of 82 MMscfd, biggest in Bangladesh's history (OGJ, Mar. 4, p. 42).
Cairn also drilled an appraisal well that helped confirm commercial feasibility.
Development drilling in Sangu field is scheduled to start in November.
Cairn has acquired seismic data from the two blocks and plans to drill an exploratory well on Block 15 in first half 1997.
Although Cairn holds 75% and Halliburton 25% of Sangu field, Cairn retains 100% exploration rights on Block 16 and Block 15 immediately to the north.
Cairn as block operator will form an integrated management team with Halliburton to make optimum use of their combined expertise in developing and producing the field.
Bill Gammell, chief executive officer of Cairn, said: "The strategic alliance with Halliburton as Cairn's co-venturer and developer enables Cairn to draw on additional resources and technical expertise, while enabling Cairn to concentrate on adding further value through an active exploration program in Bangladesh".
Halliburton CEO Dick Cheney said his company will integrate into the alliance Brown & Root's capabilities in engineering, construction, and project management and Halliburton Energy Services' subsurface expertise. Both are Halliburton Co. units.
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