Cairn to invest $9.5m in Bangladesh gas field

DHAKA, Sept 7 (Reuters) - UK-based Cairn Energy Plc (CNE.L: Quote, Profile, Research) plans to invest nearly $9.5 million to try to find more natural gas at Bangladesh's only offshore field at Sangu, which may be commercially exhausted by the end of next year, a senior energy official said on Sunday.

"The firm has submitted a proposal to us to allow them to spend up to $9.5 million for continuing gas production from the offshore till 2011," said Mohammad Muqtadir Ali, a director of state-run oil, gas and mineral corporation Petrobangla.

So far Cairn has invested about $1 billion in Bangladesh, including nearly $600 million in Sangu, which began producing gas in 1998, officials said.

Last month the oil company informed Petrobangla the field was now left with a recoverable gas reserve of just 14 billion cubic feet (bcf) which would be exhausted by September, 2009.

"The company will spend money to perforate two wells and install two compressors produce 9.30 bcf more gas," Muqtadir told Reuters.

A Cairn official said the firm might receive a decision from Petrobangla early next week after a joint management panel meeting.

"We have to take a decision quickly, as hundreds of manufacturing factories in Chittagong (port city area) depend on gas supplies from Sangu," the official said.

Production from the field at the beginning was around 200 million cubic feet a day (mmcfd) and has now slumped to below 50 mmcfd, resulting in a severe gas shortage in the region. (Reporting by Serajul Islam Quadir; Editing by Clarence Fernandez)