As previous deals for hydrocarbon exploration in two deep sea blocks in the Bay of Bengal have not worked out with US-based ConocoPhillips and Norway-based Statoil ASA, the government is now not so sure about awarding three other blocks to these companies.
A top official of the Energy and Mineral Resources Division (EMRD) said new deals were unlikely now as ConocoPhillips had been dilly-dallying in implementing the previous deals.
In January, ConocoPhillips and Statoil jointly submitted bidding documents for exploring oil and gas in three deep-sea blocks – 12, 16 and 21 to be specific – in the Bay.
On February 19, state-run Petrobangla recommended that the EMRD signed production sharing contracts (PSCs) for the three new blocks upon approval from the Cabinet Committee on Economic Affairs. But there has been no progress in this regard so far as the EMRD has taken no further step in this regard.
In June 2011, a PSC was signed between ConocoPhillips Bangladesh Exploration 10/11 Ltd and Petrobangla for exploring offshore blocks 10 and 11, the country’s first ever deepwater hydrocarbon hunt. However, progress have been very slow.
For two years since then, ConocoPhillips conducted 2D seismic surveys in blocks 10 and 11 but have not properly disclosed their findings.
“ConcoPhillips seems to have lost interest after wasting much time. I guess they now want a higher price than what is mentioned in the initial contract for the previous two blocks [10 and 11]. We are keeping a close eye on their activities regarding the signing of deals for the three blocks,” Secretary of EMRD Md Abu Bakar Siddique told the Dhaka Tribune recently.
“We are now working on a Multiplan 2D-seismic survey in deep sea, and floating fresh tenders,” he said.
Seeking anonymity, a Petrobangla official said: “If ConocoPhillips is really looking for a better price after three years of signing contract, then I must say what they are doing is injustice. This is just setting a very bad example.”
He also said such behaviour by the US-based company might threaten energy growth and security of Bangladesh.
The price quoted for every million cubic feet of gas was $4 in the contract for the first two blocks. Sources said ConocoPhillips have been looking to double that price.
The bidding documents for the three deep-sea blocks show that ConocoPhillips and Statoil have proposed to conduct mandatory 2D seismic surveys on 1,412 line-kilometre area of block 12; 775 line-km of block 16; and 1,376 line-km of block 21 in three years.
Over the next two years, they have also proposed to conduct 2,000line-km of 2D or equivalent 3D seismic surveys and drill an exploratory well each in the three blocks. ConocoPhillips and Statoil will spend $109m for the exploratory well and other work in each block and deposit the amount as bank guarantee in line with the bidding proposal.
After the initial five-year period, the two companies have proposed to drill another exploratory well in each of the blocks.
The country’s energy security depends largely on the exploration of deep-sea blocks.
A Petrobangla director told the Dhaka Tribune that the country would need around 22.76 trillion cubic feet (tcf) of gas until 2025. On the contrary, the current recoverable gas reserve stood at 16 tcf that would last around 16 years.
According to the existing contract for two blocks, ConocoPhillips was supposed to inform the government by June 2014 about what its plans were. Upon application, the government allowed six more months time to the company to clarify its stance.
Last week, the Dhaka Tribune correspondent sent an e-mail to the managing director of the company asking when they were planning to inform the government, and whether the government had told them anything about the three new blocks.
ConocoPhillips however is still to reply that mail.