GAS WELL EXPLOSION

UNCLAS DHAKA 000130

SIPDIS

E.O. 12958: N/A
TAGS: ECON ENRG EINV BG
SUBJECT: GAS WELL EXPLOSION



1. A gas field explosion in Sunamganj forced 10,000 people
from their homes on January 8th, sparking widespread media
and government speculation as to the cause and extent of the
damages. Newspapers reported losses in millions of dollars
and speculated that the fire would continue for 30 to 45
days. Experts feared that a new rig would have to be brought
to control the fire, delaying the process by 30 days.


2. According to initial reports, the explosion destroyed the
oil rig and the well remained inaccessible by operators. To
control the fire, Niko, the Canada-based manager of the gas
field, contemplated drilling sideways, 500 meters from the
well, to relieve pressure on the well. However, the well
proved to be low in gas, and the fire burned itself out the
following day.


3. A Chinese subcontractor, CPTDC, operated the rig. The
explosion destroyed the rig and caused more than $25 million
in operational losses to Niko and the subcontractor,
according to press reports. Niko may also have to bear the
additional cost of rebuilding more than 40 homes that were
destroyed by the explosion. Senior officials from the Energy
Ministry and Petrobangla visited the site and announced plans
to set up an inquiry committee. Press reports, perhaps
drawing on BDG officials have already blamed Niko
"mismanagement" and alledgedly flawed technology for the
blowout.
THOMAS