Tata Petrodyne, the oil subsidiary of Tata Sons, is planning an oil and gas exploration and production venture in Bangladesh to fuel the group's upcoming steel, power and fertiliser plants in that country.
The Tatas have recently projected an investment of $3 billion for the proposed mega projects in the three sectors.
For the oil and gas exploration project, the Tatas will join hands with major players for acquisition of assets. For this, Tata Petrodyne company is learnt to have initiated talks with the state-run Petrobangla and the UK-based Cairn Energy.
Apart from the investments in Bangladesh, Tata Petrodyne is also looking for block acquisitions in Myanmar and Australia. VK Sharma, executive director, Tata Petrodyne, told Business Standard that the company was evaluating the opportunities but nothing was finalised yet.
"We are planning an integrated approach to improve the business in Bangladesh. Tata has steel, power and fertiliser projects in pipeline. Therefore, supply of natural gas should be ensured," he added.
The proposed $3 billion investment by the Tatas includes a 2.4-million-tonne-per-annum steel plant, a urea factory with a one-million-tonne capacity and a 1,000-mw gas-fired power plant.
Faced with protests from local steel manufactures, Tata Steel is not finding it easy to source natural gas from Bangladesh.
If Tata Petrodyne ventures upstream, the sourcing of natural gas for its projects will be easy. The Tata group has already submitted a $3-billion investment proposal to the Bangladesh government.
"The Tatas had offered to buy natural gas at $3.10 per thousand cubic feet, doubling the previous offer of $1.5. If the project is through, Petrobangla will provide gas to the plants. Tata Petrodyne's new initiative will ensure energy security to the company," sources in the industry said.
Even though the exploration history of Bangladesh goes back to almost a century, prospecting density has remained very low. Only 69 exploration wells have been drilled, which resulted in the discovery of 24 gas fields of sizes ranging from more than 4 trillion cubic feet (tcf) to 25 bcf initially in place. This indicates the extremely low exploration density but a high success rate of one in three exploration wells.
Of the exploration wells, 13 are offshore with two discoveries and the rest 56 are onshore with 20 discoveries. It is of great significance that of the 56 onshore wells, 47 exploratory wells were drilled in the eastern margin of the country with the discovery of 21 gas fields.
