A proposal to sign on a joint venture of US-based ConocoPhillips and Norwegian Statoil ASA to carry out oil and gas exploration will go before a cabinet committee today.
The Energy and Mineral Resources Division (EMRD) will place the proposal to contract the joint venture to explore three deep-sea blocks in the Bay of Bengal before a meeting of the Cabinet Committee on Economic Affairs to get approval to sign production sharing contracts (PSCs) with the international oil companies.
“We sent a proposal for the signing of the PSCs and sought the necessary approval from the Cabinet Committee on Economic Affairs. After getting the committee’s approval, we will sign the companies to operate in blocks 12, 16 and 21,” EMRD Secretary Abu Bakar Siddique told the Dhaka Tribune yesterday.
On February 19, 2014, Petrobangla recommended that EMRD sign the PSCs following necessary approval from the cabinet committee. That recommendation is being implemented a year later.
An earlier decision by the government to sign over exploration rights for just two deep sea blocks per company or consortium had stalled the signing of the PSCs with the ConocoPhillips – Statoil joint venture.
In reply to a question, Abu Bakar said: “Although we had earlier decided that we would sign only two instead of three blocks with them, we have changed our decision.”
According to the amended PSCs, Petrobangla will purchase gas from the blocks at a rate of $6.5 per unit.
A top EMRD official, asking not to be named, recently told the Dhaka Tribune that Prime Minister Sheikh Hasina, who is also the minister for power, energy and mineral resources, had directed the division not to award more than two blocks to a single company or venture.
In January 2014, ConocoPhillips and Statoil jointly submitted bidding documents to explore for oil and natural gas in three deep-sea blocks in the Bay of Bengal – 12, 16 and 21 – under the amended Model PSCs 2012.
The two companies will conduct mandatory 2D seismic surveys on a 1,412 line-kilometre area of block 12; 775 line-km of block 16; and 1,376 line-km of block 21 over three years.
Over the next two years, they will conduct 2,000 line-km of 2D or equivalent 3D seismic surveys and drill an exploratory well at each of 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 guarantees as per the bidding proposal.
After the initial five-year period, the two companies will drill another exploratory well in each block.
Petrobangla had first put a total of 12 blocks up for international bidding on December 17, 2012 under the Bangladesh Offshore Bidding Round 2012.
Nine of the blocks were in 51,589 square kilometres of shallow sea and three in 10,041 square kilometres of deep sea.
According to the PSC, each contractor will be allowed 20 years to work on an oil field and 25 years on a gas field from the date of approval of the development plan.
They cannot export oil and gas, but they can sell gas to a third party inside Bangladesh.
