In the typical protocol, contract prices are negotiated down after the initial proposal; however, reports suggest that Gazprom’s contract price for three drilling projects in Bhola was unexpectedly increased by $4 million.
Gazprom initially submitted a proposal of $60.81 million for the drilling projects at Tobgi, Ilisha, and Bhola North-2, but the Bangladesh Petroleum Exploration and Production Company Limited's (Bapex) technical committee found this amount excessive and recommended a reduction.
Nonetheless, sources within Bapex indicate that the price was secretly increased, with one source citing a $4 million increment to reach $65 million, while another suggests a $2 million increase to $63 million.
Bapex has remained notably tight-lipped regarding the pricing and has consistently evaded questions on the subject.
When asked, Bapex Managing Director Md Shoaib attributed his lack of specifics to his joining date, which postdated the negotiation.
A recent report in an English daily erroneously cited the price at $77 million, which Bapex MD confirmed as inaccurate without specifying the correct amount.
Amid these pricing irregularities, the Bapex technical committee also raised objections to Gazprom's allocation for rig mobilisation at Tobgi, Ilisha, and Bhola North-2, particularly as a rig was already stationed in Bhola.
Despite these objections, Gazprom was paid $4.06 million for rig mobilisation, bypassing the technical committee’s advice under special regulations that allowed the contract without tender.
The initial agreement, a no-tender contract awarded in October 2019, formed a high-level committee with representatives from Petrobangla, Bapex, the Ministry, and BGFCL, with Petrobangla’s then-director of operations and mines as chair.
The committee’s report suggested adjusting the mobilisation costs to reflect the rig’s location.
Nonetheless, the approved mobilisation budget for Tobgi-1 included $4.06 million for drilling rig tools and personnel. This amount was paid to Gazprom as requested, despite committee recommendations.
Comparing prior drilling expenses, Bapex data shows that from 2013-2017, costs for eight wells varied between $16.48 million and $17.69 million per vertical well.
Yet, Gazprom’s recent proposal included $20.28 million for Tobgi-1 and Ilisha-1, and $20.25 million for Bhola North-2, marking an average increase of $3.29 million per well.
The technical committee’s recommendation to negotiate the pricing went unheeded, resulting in a state-recorded payment to Gazprom of either $63 million or $65 million.
Bapex’s internal documents reveal that for similar work, such as the 2015 Rupganj well, Bapex achieved completion at a cost of Tk61 crore, against an estimated Tk97 crore, refunding the unused funds. The expense for Srikail East-1 and Salda North-1 in 2016 was Tk72 crore per well.
However, in recent projects, Bapex is paying Gazprom Tk200 crore per well, a staggering increase.
Proponents of Gazprom's commission argue that Bapex’s own rig use justifies the cost reduction.
They suggest that adding a rig rental would bridge the cost gap with Gazprom’s pricing.
However, energy experts criticise this reasoning, noting that for a standard 45-day drilling project (often completed in 30 days), rig rental, at Tk20,000 per day, would only add Tk10 crore, bringing the total to Tk82 crore per well.
The rising costs, coupled with alleged mismanagement, have drawn sharp criticism.
CAB Energy Advisor Professor Shamsul Alam said that such irregularities are egregious examples of misappropriation.
“The actions in awarding contracts to Gazprom are criminal offences and should face judicial scrutiny,” Alam asserted.
He added that these contracts, awarded without tenders under a special law, present an inflated estimate by Tk100 to 130 crore per well, diverting thousands of crores of taxpayer money to a syndicate.
The contracts are widely criticised for including questionable expenses to balance the inflated costs, prompting calls for a formal investigation and possible prosecution.
