The government has backtracked on its earlier stance and decided to offer all the three deepwater blocks to the joint venture (JV) of US oil and gas giant ConocoPhillips and Norwegian Statoil instead of two, said sources.
"We shall offer all the three blocks for which the JV submitted bids and came out responsive by the Petrobangla evaluation," state-owned Petrobangla Chairman Istiaque Ahmad told the FE Saturday.
He said the JV would be invited to ink production-sharing contracts (PSCs) soon after getting a final go-ahead from the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR).
The EMRD earlier had decided to offer two deepwater blocks and subsequently asked the Petrobangla to select two deepwater blocks and asked the ConocoPhillips-Statoil JV for the PSC signing.
But the JV reacted sharply and sought further incentives from the government in the PSCs, apart from seeking all the three deepwater blocks - DS-12, DS-16 and DS-21 - in retaliation.
"As a result, the government has backed down," said an industry insider.
The ConocoPhillips-Statoil duo jointly submitted bids for all the three blocks deep in the Bay of Bengal which were put on bidding under Bangladesh's 2012 licensing round.
The joint venture emerged as the single bidder for all the three blocks offered under that bidding round.
The Petrobangla subsequently evaluated the JV as technically fit to be awarded all the three deepwater blocks.
But the EMRD later decided to offer two deepwater blocks from among the proposed three in line with a decision of the government high-ups.
In its bids, the JV was committed to invest $327 million for all the three deepwater blocks, which are expected to run for five years for initial exploration and three years for subsequent exploration.
Earlier in December last year, US ConocoPhillips had pulled out of two other deepwater blocks -- DS-10, DS-11 -- previously awarded due to 'poor' fiscal terms.
The JV of the ConocoPhillips and the Statoil was, however, still hopeful of securing the latest three Bay blocks where the fiscal terms are better.
Under the PSC terms for the deep water blocks under the 2012 bidding round, the contractors would get a higher price for gas produced from their blocks.
When contacted, ConocoPhillips Managing Director for Bangladesh operations, Thomas J Earley said, "The ConocoPhillips-Statoil joint venture continues to look forward to the award of all three blocks (Blocks DS 12, 16 and 21) and to commencing exploration in these blocks as soon as possible."
Regarding new incentives, he said, "We have proposed that escalation of the gas price begin earlier than at first production, which is similar to what is in place in neighbouring countries like Myanmar and Thailand."
As per the original PSC term, the annual 2.0 per cent hike in natural gas price to begin at first production, meaning the date when the JV would start oil and gas production from the deep water blocks.
"It will take quite a few years to achieve first production from a deepwater development and fixing a gas price today for such an extended period will threaten the economic viability of the project," Mr Earley added.
azizjst@yahoo.com
Conoco-Statoil JV gets 3 deepwater blocks, finally
M Azizur Rahman | Published: February 08, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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