Shell exits Bangladesh, citing profits

Royal Dutch/Shell Group, Europe's biggest oil company, walked away from Bangladesh after the government's failure to open up domestic and export markets meant the company's gas operations wouldn't be profitable enough.

"If there was a market, either on an export or domestic level, possibly Shell would have thought twice," said Ruba Rahman, external affairs manager for Shell Bangladesh.

Shell, Unocal Corp and other oil companies that invested about US$1 billion in Bangladesh in the past five years are frustrated by the country's bar on gas exports. The subtropical nation, where four-fifths of the 137 million people live on less than US$2 a day, has reserves to meet 90 years of demand.

"Bangladesh must now seriously address the issue of allowing limited amounts of gas exports to India," said Alister Morrison, an Asia-Pacific energy consultant at Wood Mackenzie. "The window of opportunity seems to be closing fast."

Edinburgh-based Cairn Energy Plc agreed Monday to pay US$50 million for Shell's Bangladesh assets, including the Sangu field that supplies a quarter of the country's gas. Cairn discovered Sangu in 1996 and held an equal 37.5 percent stake in the field.