Posco Daewoo in the frame for deep sea blocks, deal to include gas export

In order to facilitate the deal, the ministry is receiving Expressions of Interest (EoIs) under the Speedy Supply of Power and Energy (Special Provision) Act 2010 instead of under the model production sharing contract (PSC) – a first in Bangladesh’s history. The EoIs include provision for the export of gas – something that has been revived despite being jettisoned in 2012. Speaking to the Dhaka Tribune, an Energy and Mineral Resources Division (EMRD) official, who requested anonymity, claimed that invitations for EoIs for deep sea blocks 10 and 11 (DS 10 and DS 11) were made in a hurry in order to grant the contract to Posco Daewoo. When contacted for comment, EMRD Secretary Nazimuddin Chowdhury told the Dhaka Tribune that although the bid had been sought under the Special Act, all of the normal procedures had been followed. The EMRD has already decided in favour of signing a deal with Posco Daewoo for the exploration of DS 12 and is awaiting approval for the deal from the Cabinet Committee on Economic Affairs. Deep sea blocks 10 and 11 were previously awarded to US energy company ConocoPhillips five years ago. ConocoPhillips took part in bidding for blocks DS 10 and DS 11 in 2008 and inked a deal with the government in 2011. But in October 2014, after the government declined a proposal by the US oil company to increase gas prices following the signing of the deal, ConocoPhillips expressed its lack of interest in the two blocks, cancelled the deal and left the wells unexplored.Gas export, competitive prices OKedOn October 19, the government received expressions of interest from three international oil companies – Singapore-based Kris Energy, South Korean Posco Daewoo International Corporation, and Norway’s Statoil – for DS 10 and DS 11. The very same day, the three companies also submitted EoIs for the exploration of shallow sea block 10 (SS 10). “We have received EoIs from three IOCs. The submission deadline was October 19. Requests for Proposal will be sought from the short-listed companies,” Petrobangla Director Jameel A Aleem confirmed to the Dhaka Tribune. Unlike usual bidding rounds, the government decided to purchase oil and gas in the Bay of Bengal at a competitive price, to be quoted by the international oil companies in their bids. In previous bidding rounds, Petrobangla fixed the prices for oil and gas in the model PSCs before launching the bid. On September 28, state-owned Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) invited expressions of interest to explore and develop DS 10, DS 11 and SS 10 under the Speedy Supply of Power and Energy (Special Provision) Act 2010. On the gas export provision in these EoIs, the EMRD official said the companies wanted to include the provision in their contracts to make more money, but the government did not want to allow it at first because of the demand of gas in Bangladesh. “They [the IOCs] argued that Bangladesh would not need much gas, so the provision of gas export must be included,” he said. The government eventually gave in to the deamnd of the IOCs and allowed the provision again in order to bring the companies to come and work in Bangladesh, he said.Daewoo’s existing interestsDaewoo is set to ink an agreement with Petrobangla for DS 12, pending approval from Cabinet. “The government has finalised its decision to award Posco Daewoo International Corporation of South Korea an agreement to explore deep sea gas block 12 in the Bay of Bengal under the Speedy Supply of Power and Energy (Special Provision) Act 2010,” an official of the Energy Ministry, asking not to be named, told the Dhaka Tribune. The agreement includes a gas export provision in the model production sharing contract even though the provision was cancelled four years ago under the revised PSC of 2012. Posco Daewoo and Singapore-based Kris Energy both submitted tenders for DS 12.Strategic tenderingPosco Daewoo and Kris Energy earlier submitted EoIs for blocks 12, 16 and 21, but Kris Energy later declined to submit a Request for Proposal (RFP). Daewoo stayed in the process and submitted an RFP for DS 12. “Last time, Kris Energy played the role of a dummy company and we are apprehending that they will do the same this time as well. Posco Daewoo will get the job if this happens again,” the official of the EMRD said. According to the agreement with Petrobangla, Daewoo will sell 1,000 cubic feet of gas at $6.50 per unit for block 12. A Petrobangla official said Daewoo had explored gas in Myanmar’s Shwe gas field which is adjacent to Bangladesh’s deep sea block 11. Myanmar’s AD 6 gas block is near Bangladesh’s DS 10. Currently, three foreign companies – Chevron, Santos and Kris Energy – are working at onshore and shallow sea blocks in the country following international biddings in 1993 and 1997.