A Chinese geophysical service firm has been selected to conduct a two-dimensional seismic survey in Bangladeshi waters of the Bay of Bengal by contractors Indian state-owned ONGC Videsh Limited and Oil India Limited.
Bangladesh signed deals with ONGC Videsh and Oil India on February 17 last year to search for oil and gas in two offshore blocks in the Bay of Bengal.
Chinese firm BGP is expected to begin the surveys to determine the volume of reserves in blocks 4 and 9 in February next year.
“The Indian companies informed Petrobangla of their decision last week,” a Petrobangla official said, asking not to be named. “The Chinese company was selected from a shortlist of bidders.”
BGP was the lowest bidder, the Petrobangla official added.
Bangladesh has been in the throes of a severe gas crisis over the last few years. Experts warn that the problem is set to slow down industrialisation and pose problems for household gas supply unless new sources of supply are found.
The government and Petrobangla jointly signed production sharing contracts (PSC) for shallow blocks 4 and 9 under the fourth round of the PSC.
The two Indian companies will invest $144.8m in the two blocks. This is the first time that firms from the neighbouring country have signed offshore drilling deals with Bangladesh.
India’s ONGC and Oil India offered to invest $58.4m to conduct a 2D-seismic survey of 2,700 line-km, a 3D-seismic survey of a 200sq-km area and drill two wells in block 4.
They also offered to invest $86.4m to conduct a 2D survey of 2,850 line-km, a 3D survey of a 300sq-km area and drill three wells in block 9.
According to the deal, the government’s profit-sharing ratio for the two blocks will be 60%-85% for gas and 70%-90% for oil. For both blocks, the contract period is eight years, with the first five years to be spent on preliminary exploration.
The companies are obligated to use a maximum of Bangladeshi working hands, gradually increasing to 50% during the exploration phase and to 90% by the 10th production year.
Cost recovery will be a maximum of 55% per year of available petroleum. Cost recovery of expenses and compensation provisions will not be available if the contractors are found to be negligent.
The contractors cannot claim compensation if petroleum operations are suspended because of a dispute, according to the deal.
If the company goes into commercial operation, the Bangladesh Petroleum Exploration and Production Company Limited (Bapex), on behalf of the government, will bear 10% of the total investment cost.
