The gas field that heralded a new era of foreign investment in oil and gas sector and started operation back in 1998 is supposed to supply 200 million cubic feet per day (mmcfd) of gas as per the contract between its operator British Cairn and Petrobangla.

But despite its best efforts, Cairn cannot supply more than 140 to 145mmcfd now. It was able to supply up to 160mmcfd at a point in time in the past. In December last, the oil company began re-perforating its four existing gas wells to increase the supply to 200mmcfd from early this year. But the venture failed, shattering Petrobangla's gas supply plans for the current year.

The gas crisis gripping the country now could be eased had Sangu performed as per projection, the sources pointed out.

Gas supply situation is the worst in Savar and Dhaka Export Processing Zone where the crisis has affected industries. "We are resolving this problem within a week by tweaking gas supply pipelines. But there would have been no problem had Sangu performed well," said a top Petrobangla official.

Demand for gas now is over 1300 mmcfd but Petrobangla supplies less than that despite having a supply capacity of 1,362mmcfd.

" Gas demand has increased tremendously, so has the supply," the official said. "In the last 30 months, we have added 264mmcfd gas with 62mmcfd added in May and June alone. But at the same time, the reserves at different gas fields got depleted by 100mmcfd. Of this, 60mmcfd depleted at Sangu. It means we have made a net gas supply gain of 164mmcfd."

Now a technical committee comprising Petrobangla and Cairn experts are assessing the reserve at Sangu field, 35km off Chittagong coast.

A source close to Cairn says the British company is once again trying to re-perforate an existing well to increase gas production up to 160mmcfd.

Sangu's gas is most expensive in Bangladesh as it charges around 2.7 dollar per thousand cubic feet (mcf). The government sells it to bulk consumers in Chittagong at around 1.2 dollars per mcf.

But despite such high price, Petrobangla is willing to buy Sangu gas due to the supply shortfall.

Gas demand is growing by at least seven percent a year while it can take years to ensure new supplies.

The earliest new supply of gas is likely to come from US company Unocal's Moulavibazar gas field in January next-- 35mmcfd. Bangladeshi company Bapex is expected to add 25mmcfd from Fenchuganj-3 well before June.

A recent discovery of gas in block-9 by Irish company Tullow has not yet received attention because it is being considered a small reserve.

Meanwhile, Cairn has told Petrobangla it was not negotiating with any foreign oil company to sell out Sangu. Local newspapers yesterday reported, quoting Indian daily Telegraph, Cairn was negotiating with Indian oil company ONGC over Sangu. Cairn however explained to Petrobangla the reported negotiation was an event of the past and it is no longer on.

"Given the poor health of Sangu, it is highly unlikely that any company will buy it now," said a Petrobangla source.

Cairn struck Sangu gas in 1996 and its success encouraged other oil companies to participate in the second round block bidding for oil and gas exploration in 1997. The medium-sized gas field has a reserve of 720 billion cubic feet (bcf) as per Petrobangla's estimates while Cairn puts the figure at 800bcf.