The New Nation - Internet Edition

Staff Reporter

Abandoning the Magnama-1 offshore exploration well in Block 16, British oil and gas explorer Cairn Energy Plc yesterday said it would soon begin drilling in Hatiya-1 exploration well.

The Magnama-1 offshore exploration well, a well in Bangladesh was to be plugged and abandoned after it failed to hit commercial gas reserves, Cairn said in a statement from its head office in London.

The announcement immediately hit Cairn shares price in the London Stock Market yesterday, when its shares traded down 1.5 per cent at 2,903 pence at 0903 GMT, according to a report received in Dhaka last evening.

The company said drilling was expected to commence soon on the nearby Hatia-1 project. It was, however, not clear as to whether Cairn has made the announcement about drilling in Hatia-1 exploration well, which is located 12 km northwest of Sangu gas field, to stabilize the price of its shares in the market.

The Cairn started drilling the well in October in the Magnama structure in the Bay of Bengal, some 60 kilometres south of Chittagong port.

Investors and the Bangladesh Government had high hopes for the US $117 million project exploring the Magnama structure in the Bay of Bengal.

But Chairman of the state-run Bangladesh Oil, Gas and Mineral Corporation or Petrobangla, Jalal Ahmed, said Cairn had failed to discover commercially viable gas with the Mangama well.

His comments have weighed on Cairn shares in recent days.

Cairn, in its statement said Magnama-1 was drilled at a crestal location to a total depth of 4,003 metres BRT to evaluate the potential for gas in abnormally high pressured sands beneath those productive at Sangu and elsewhere in the basin.

The well encountered a series of well developed sands in the deepest section drilled but these were not gas charged and the well is now in the process of being plugged and abandoned, the statement said.

Magnama-1 also encountered a number of thin gas bearing sands, which may be subject to further evaluation at a later date, it said.

Cairn operates the country's only offshore gas field at Sangu in the Bay of Bengal, producing up to 80 million cubic feet of gas per day (mmcfd).