The government has finally signed a deal with South Korean company Posco Daewoo Corporation to conduct seismic survey and explore oil and gas resources in deep sea block (DS) 12 under the Speedy Supply of Power and Energy (Special Provision) Act 2010.
The deal was signed on Tuesday by Sayed Asfaquzzaman, secretary of Bangladesh Oil, Gas and Mineral Corporation (Petrobangla), and Khadiza Nazneen, deputy secretary of Energy and Mineral Resources Division (EMRD), on Bangladesh’s behalf, and Si Bo Joo, senior executive vice-president of Posco Daewoo, on his company’s behalf, at Petrobangla Headquarters in Karwan Bazar, Dhaka.
This deal is technically the second one under the special act. The first one was signed in June 2011, when US company ConocoPhillips signed an agreement with the government to explore DS 10 and 11.
However, that deal fell through when ConocoPhillips pulled out of the deal in 2014; they did not accept the government’s proposal of buying gas extracted by them at $4.5 per 1000 cubic feet.
On Tuesday’s deal has come at a time when the country is reeling from energy crisis and consequently many factories are out of operation.
Speaking after the signing ceremony, EMRD Secretary Nazimuddin Chowdhury said the deal was signed under the special act due to its urgency.
“Not many international oil companies have shown interest to drill in deep sea as oil price has fallen in the international market. That is why we have signed it under the special act,” he said in reply to a query by the Dhaka Tribune.
The special act allows the government to bypass the usual bidding rounds and select a company directly for deep sea exploration.
Speaking to reporters, Posco Daewoo CEO Young Sang Kim said the company would invest around $112 million in the first five years of the agreement.
“Around $5 million will be invested in the first two years for a 1,000-line-kilometre 2D seismic survey,” he explained. “In the third year, we will invest $7 million for a 1,000-square-kilometre 3D seismic survey.
“In fourth and fifth years, the company will invest around $100 million for exploratory well drilling.”
According to the deal, Posco Daewoo will have to sell 60-85% of the gas produced from DS 12 at $6.50 per 1000 cubic feet, and 65-90% of the oil produced from the block in accordance with the model product-sharing contract pricing formula and international market price at the time when the oil will be sold.
The IOC can offer to sell the rest of the gas or oil to Petrobangla on its own terms. If Petrobangla rejects the offer, then the company will be allowed to sell it to other companies in Bangladesh.
If Posco Daewoo fails to strike a deal with the local companies as well, it can sell the remainder of the fossil fuel to foreign buyers.
If the initial drilling does not work out, the company will conduct another exploratory drilling in sixth through eighth years of the contract.
Posco Daewoo will start its 2D seismic survey by December.
Thursday, June 04, 2026
