The negotiations began after the Energy and Mineral Resources Division gave a go-ahead for the Bibiyana development plan, approved earlier by Petrobangla, the state-run oil, gas and mineral corporation.

While giving his nod recently, State Minister for Energy and Mineral Resources AKM Mosharraf Hossain expected that the negotiations with the US company would be completed in a month.

Prime Minister Khaleda Zia, who is also in charge of the ministry, will give the final approval before signing a GPSA (gas purchase and sales agreement) between Petrobangla and Unocal.

Earlier, on May 13, Petrobangla approved Unocal's Bibiyana development plan without mentioning export option and also with the investment slashed by $62million.

Petrobangla reduced the investment, as the joint management committee found $230million to be required for the development. Unocal's proposal was for $292million.

As per the PSC (production sharing contract), Unocal will solely make the investment and Petrobangla will not have any financial involvement. The IOC (international oil company)

will realise the money during the cost-recovery period by selling gas from the field.

Earlier, the Unocal had proposed the government to export gas to India from the field in Habiganj, in the hydrocarbon block 12 of the country, with the estimated recoverable reserve of 2.4 TCF (trillion cubic feet)

The field is expected to go into production by the end of 2006. Initially, it will have a production capacity of 300 MMCFD (million cubic feet of gas per day), rising in phases to 600 MMCFD.

Country's current gas demand is 1,370 MMCFD against a 1,340- MMCFD supply. The annual demand growth is 12 percent. Petrobangla officials hoped that Bibiyana would help meet the growing domestic demand.