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Two IOCs set to get 3 shallow sea blocks for hydrocarbon exploration

  • Published at 06:01 am May 2nd, 2013
Two IOCs set to get 3 shallow sea blocks for hydrocarbon exploration

State-owned Petrobangla is ready to sign agreements with two international oil companies (IOCs) to award them exploration rights at three shallow-sea blocks in the Bay of Bengal.

“We sent a letter to the energy division for its approval to sign the initial deal with ConocoPhillips and ONGC,” Petrobangla Chairman Hossain Monsur told the Dhaka Tribune yesterday afternoon.

The US-based ConocoPhillips has been awarded two deep-sea blocks in 2011 while India’s state-owned ONGC Videsh Ltd is going to operate in Bangladesh for the first time.

Even though 16 IOCs participated in the bidding process for nine blocks, only the two firms showed interest in three blocks only. The bidding process ended on April 2.

ConocoPhillips submitted a tender for block 07 while the ONGC for blocks 04 and 09.

Before the verdict of International Tribunal for the Law of the Sea (Itlos), block 07 was the southern part of what was then known as block 10; and blocks 04 and 09 were the previously 16 and some parts of block 17. Australian company Santos is currently producing gas in block 16.

Four foreign companies – Chevron, Santos, ConocoPhillips and Tullow – are currently operational in Bangladesh.

Before the Itlos verdict, the total offshore blocks were 28 but later it was revised to 23 after the verdict was announced. Bangladesh has now 46 onshore and offshore blocks.

“After the initial signing of agreements, the cabinet committee on economic affairs will approve the signing of the PSC (production sharing contract),” the Petrobangla chairman said. “It is expected that the whole documentation process will be complete by June.”

A contractor will be allowed to work for 20 years, for an oil field, and 25 years for gas fields, from the approval of the development plan.

The evaluation committee, formed by the government after completion of the bidding, put forward its recommendation to Petrobangla giving it the go-ahead with the initial signing.

The Petrobangla chairman said the government would now award three selected shallow sea blocks after completing all necessary procedures. The three deep-sea blocks would be awarded after amending the PSC 2012, he added.

According to the Offshore Bidding Round 2012, there are a total of 51,589 square kilometres in the shallow sea and 10,041 square kilometres in the deep sea in Bangladesh territorial waters.

In the new PSC, there is no scope to export oil and gas, but gas can be sold to a third party inside Bangladesh.

ConocoPhillips in its bid document proposed to explore oil and gas in block 07, conduct a 2D-seismic survey in 2,347 line kilometres and a 3D-seismic survey in 500 square kilometres, and drill one exploration well. The firm said it would spend $40m for the entire operation.

The ONGC Videsh Ltd offered to spend $58m to explore block 04, conduct 2,700 line kilometres 2D and 200 square kilometres 3D seismic surveys, and drill two wells – the first one within five years of signing the PSC and the next one within the next three years.

The Indian firm has also proposed to explore block 09, conducting 2,850 line kilometres 2D-seismic surveys and 300 square kilometres of 3D-seismic survey and drill three wells – initially one and then two wells. The company will spend $85m for operations in block 09.

The two companies will deposit bank guarantees of the same amount as they have proposed in the bidding.

On December 17 last year, Petrobangla had invited international tenders for exploring oil and gas in 12 blocks under the Offshore Bidding Round 2012. Of them, nine blocks are in shallow seas and three in deep seas.

Petrobangla fixed March 18 for the submission of bidding papers but later extended the time up to April 2 upon requests from the companies.

Previously international bidding was called under the PSC in 1993, 1997 and 2008.