IOCs\\\' apathy towards offshore exploration

The hope for an early engagement of the international oil companies (IOCs) in oil exploration in the country's offshore blocks following the settlement of maritime boundary disputes with Myanmar and India is, apparently, fading fast. Prior to the settlement of the disputes a number of international bids invited for some selected offshore blocks had gone barren. There has been no change in the situation during the post-settlement period. Even changes were made in the terms and conditions of the biddings to make those attractive with a view to wooing the IOCs. Provisions were included in the bid documents, among others, to allow the IOCs concerned to sell gas to a third party, hike in the price of gas, transfer of tax burden on to the Petrobangla and increase in the level of cost recovery amount. Yet IOCs continue to be indifferent.

One joint venture (JV) comprising US-based ConocoPhillips and Norwegian Statoil submitted bids for three deepwater blocks in 2013. When the government was about to award the contract to the JV for conducting the exploration work, it suddenly demanded further improvement in fiscal terms, beyond what is allowed under the model production-sharing contract (PSC). The ConocoPhillips in particular was trying to pull out from the deal under one or other pretext since it had found the exploration work was not commercially feasible for it. But its partner stayed back and wanted to carry on with the exploration work. However, it too has started behaving erratically of late. The IOC in question has placed fresh demands for enhanced fiscal benefits and asked the Petrobangla to construct a pipeline to carry gas to the shore from the deepwater blocks.

Bangladesh's experience with bidding rounds for its offshore blocks does not match with that of neighbouring India and Myanmar. The neighbours got substantial response from the IOCs in recent years. There were single as well as multiple bids for their both onshore and offshore blocks. The response from IOCs was more in the case of India which has a number of home-grown oil exploration companies. The main reason for poor response from IOCs to Bangladesh offer has been the lack of hydrocarbon database, usually created through 2-dimesion (2D) and 3-dimension (3D) seismic surveys.

Though belatedly, the Petrobangla in the early part of this year has taken initiatives to build up its own seismic database. It received bids in March last from international firms under the 2D non-exclusive multi-client service policy to conduct seismic surveys within the country's territorial waters barring the blocks already awarded for hydrocarbon exploration. All the bids were found responsive and sent in April to the relevant ministry for scrutiny and approval. However, it seems that the ministry is not in a hurry to make a decision.

But the delay in decision-making diminishes the prospect of taking up the survey work by the prospective firms in the coming winter. It takes around two years' time for a firm to complete the seismic survey over the designated area. Foot-dragging by almost all public sector entities has turned out to be a chronic problem which has been taking a heavy economic toll on the nation. It is expected that officials and experts dealing with the seismic survey issue would shake off their inertia and make expeditious decision since the country needs to beef up its hydrocarbon stock urgently.