The committee approved the proposal on February 8 allowing Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) to sign the contract under the Speedy Supply of Power and Energy (Special Provision) Act 2010.
“As the committee has given the go-ahead, we will sign the deal by the end of this month,” a Petrobangla director told the Dhaka Tribune on Saturday, requesting not to be named.
The upper echelon of the Ministry of Power, Energy and Mineral Resources has hastened the process of getting the deal approved by the cabinet body to show progress in deep sea exploration – something that they have failed to do in both the current and previous terms of the government, a ministry official told the Dhaka Tribune.
Under the contract, Posco Daewoo will explore deep sea block 12 (DS 12). If gas is found in the block, the company will sell 1,000 cubic feet of gas at $6.5 per unit.
The South Korean company has already invited tender applications from third parties to conduct a two-dimensional seismic survey in the block. The deadline for submission is on February 16.
The contract is a first of its kind in the country as Posco Daewoo has been selected directly under the special act, instead of through the traditional tender procedure, sources said.
The government has decided to bypass the usual bidding rounds and purchase oil and gas explored by international oil companies (IOCs) in the Bay of Bengal at a competitive price, they added.
Posco Daewoo submitted an expression of interest (EoI) to Petrobangla under the special act to explore DS 12 with the provision of gas export – something that has been revived despite being scrapped in 2012.
Under the provision, if fossil fuel is found in the block, the company will first offer Petrobangla to buy a portion of the findings, to be obtained under production sharing contract.
If Petrobangla refuses to buy the fossil fuel, Posco Daewoo will make the offer to other companies in Bangladesh.
If the other companies reject the offer as well, the South Korean company will have the liberty to sell the fossil fuel to foreign companies.
Posco Daewoo has already explored Myanmar’s Shwe gas field which is adjacent to Bangladesh’s deep sea block 11, said a Petrobangla official.
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.