IOCs disappoint Bangladesh

The American oil giant ConocoPhillips' decision not to get involved with the hydrocarbon (HC) exploration in three deepwater blocks in the Bay of Bengal, as reported in this paper last Friday, comes as a disheartening piece of news. The US company's interest in oil exploration in Bangladesh has been rather erratic. It had earlier closed its operations involving the two separate deepwater blocks after carrying out 2D seismic surveys due to 'poor' fiscal terms. Last year it also had backed out from signing deal on a shallow water block for similar reasons. But the companies in question last week signed production sharing agreements with Myanmar to conduct exploration in a deepsea block off Western Rakhine Coast. They have agreed to invest $ 323 million in exploration activities there.

However, the hope that the ConocoPhillips and its joint venture partner Statoil would this time take up the deepwater blocks offered to them for exploration early this month was rather strong. There were a few reasons for this. The notable among those was the hike in purchase price of gas, if and when discovered and extracted.  Prior to awarding the contract to the joint venture, the Petrobangla agreed to hike the gas purchase price by 2.0 per cent annually. Now all the allurements are proving useless as the ConocoPhillips finds Bangladesh not 'strategically fit' in their portfolio.

The developments surrounding the international biddings for both shallow and deepwater blocks in the Bay do depict a sorry tale of lack of interest among international oil companies (IOCs) about HC exploration in Bangladesh off-shore territorial waters. High hopes were earlier generated following a couple of verdicts delivered by the relevant international court over maritime disputes with Myanmar and India. The lack of interest now on the part of the IOCs does obviously deal a blow to such hopes. This is more so as India and Myanmar have already hit large deposits of gas in a number of their respective deepwater blocks.  It was only natural then to hope that IOCs would also be interested in the Bangladesh offshore territorial waters.

Earlier, a good number of IOCs had cited the disputes over maritime boundary with its immediate neighbours as reasons for not taking part in international bidding. Hence, the lukewarm response on the part of IOCs at this point of time after the removal of that barrier, is otherwise upsetting for a country that badly needs to augment its energy supply immediately.  The country is now entirely dependent on the supply of gas from its onshore fields that have been depleting fast. The current supply of gas from the onshore fields is not enough to meet the demand.  The demand-supply gap has been a major irritant for the economy.

The Petrobangla, the sole agency responsible for looking after the energy sector affairs, is also partly responsible for the current deplorable situation as far as HC exploration in the deepwater blocks is concerned. It has dragged its feet over conducting seismic survey in the Bay. The circles concerned have now pinned their hope on the results of the seismic survey. The Petrobangla is reportedly about to begin the survey.  In the event of positive results of the survey and also of the reversal of the international oil price situation, there would hopefully then be a change of attitude among the IOCs.