The Law Ministry has okayed transfer of Cairn’s ’operatorship' in oil and gas blocks in the country to oil giant Shell, sources said.

The approval, given on Sunday. makes Shell Oil 'full operator’ in blocks 15 and 16 including the Sangu gasfield and allows British company Cairn to formally wind up from Bangladesh.

The approval was given at an "unprecedented pace"’ and clarifications earlier sought by the government from Cairn regarding change in operatorship was "ultimately ignored", the sources said.

All but four employees of Cairn left Bangladesh by July 1.

Local employees of Cairn have been transferred to Shell Oil which has now started looking after blocks 15 and 16.

The sources claimed that Cairn spent "huge resources" behind a local lobbyist to "end its Bangladesh chapter as quickly as possible". The lobbyist. who was also an agent of an American oil company "provided undue benefits to some high officials of Petrobangla. the Energy Ministry and the Law Ministry".

As a result of the "lobbying", many of Cairn's pending budgets. which were awaiting clarification and government review, were passed. These include Cairn’s Operation Budget

for 1999 and another one million dollar budget for shifting of office from Baridhara to 1DB Bhaban in Agargaon.

The Law Ministry's approval for transfer of operatorship also "makes a major amendment to the complicated oil and gas exploration agreement document", called the Production Sharing Contract (PSC).

It paves the way for Occidental which, like Cairn, sold all its concerns in Bangladesh including its operatorship in blocks 12. 13 and 14 to Unocal last month. A similar deal was made by Okland with Tullow regarding blocks 17 and 18. Tullow has purchased 80 per cent of Okland's concerns in Bangladesh.

Cairn and Shell initiated a deal in mid-1998 under which Cairn first sold 50 per cent of it! concerns in Bangladesh to Shell. In February, the companies revised their deal and Cairn sold all (100 per cent) its local concerns to Shell.

In both the case. Cairn did not inform Petrobangla which is contractually the partner anc owner of the oil and gas blocks.

Cairn had sought govern ment permission for sale of 50 per cent of its concerns in late '98. At that time, the Law Ministry sought Cairn's clarifications on several issues and said that the PSC did not provide for transfer of operatorship.

In February- March, Cairn again sought government permission for its 100 per cent sellout deal. This time again, the Law Ministry sought clarification from Cairn and asked under which provision of the PSC could the British company ignore other signatories of PSC and the Gas Sales Purchase Agreement (GPSA) and strike a deal all by itself.

“The government had agreed in principle to approve the change in operatorship since Cairn would no longer be present in Bangladesh as an investor and Shell Oil is a good operator." observed a source. “But we should not create a precedence in which companies get away without clarifying their position regarding terms of the PSC they violated earlier.”