The operation of US oil and gas giant ConocoPhillips in two deepwater blocks - DS-08-10 and DS-08-11 -- came to an end on Monday after three and a half years of signing production-sharing contract (PSC).
ConocoPhillips was awarded 70 per cent of the original size of DS-08-10 and 85 per cent of DS-08-11 -- on June 16, 2011 due to the then maritime boundary disputes with neighbouring India and Myanmar.
A side agreement was also inked with the US firm to allow the company to hold the rights for exploration in the disputed areas once the boundary dispute is settled in Bangladesh's favour.
Although disputes with both the neighbours have been settled, the ConocoPhillips left the entire area of the blocks citing non-viable prospects.
"We have decided not to continue petroleum exploration operations (in these two blocks), and the PSC will terminate on December 15, 2014," managing director of ConocoPhillips Bangladesh Tom Earley told the FE.
During the signing of PSC, ConocoPhillips had provided guarantee worth US$ 52 million for initial exploration period, $58 million for the first extension period and $50 million for the second extension period.
Minimum bided work programme included 973 line km seismic survey and one optional well during initial exploration period, 500 square kilometre 3D seismic and one exploration well each during first and second extension periods.
The US firm in late October informed the Petrobangla of its inability to continue exploration in these two blocks, citing them as non-viable.
ConocoPhillips had invested around US$20 million to carry out two-dimensional (2-D) seismic surveys in the blocks, and found 20 per cent prospect.
The firm did not drill any well during the initial exploration period of the production-sharing contract (PSC) although it was extended by six months in June this year.
With the exit of ConocoPhillips, not a single offshore oil and gas block in the Bay, offered in the 2008 bidding round, is left for exploration.
During the bidding, the Petrobangla offered a total of 28 offshore blocks - 20 in deep water and eight in shallow water.
But the Petrobangla could award only parts of the two blocks to ConocoPhillips, and that too after a series of meetings and three years after launching of the bidding round.
The US firm in April backed out from signing PSC for oil and gas exploration in shallow water block SS-07 after being selected finally by the government for inking a PSC.
It then stated that the block, located offshore, was no longer competitive in the company's portfolio, and hence it notified the Petrobangla that it could not sign the PSC under the current terms.
Before taking a decision on leaving these two deep water blocks, ConocoPhillips in June had sought upward revision of fiscal terms in the PSCs.
The firm then held talks with State Minister for Power, Energy and Mineral Resources Nasrul Hamid, conveying its plea.
It was seeking 2.0 per cent hike in natural gas tariff annually and raise the tariff to a level similar to that of neighbouring Myanmar.
ConocoPhillips also wanted that like Myanmar, Bangladesh should build sub-sea natural gas pipeline to carry natural gas, to be produced in two deep water blocks, from deep-sea to the shore.
Separately, the US firm, along with Norwegian Statoil, is eyeing to have PSC inked with the Petrobangla for three new deep water blocks - DS-12, DS-16 and DS-21 - that were offered during the 2012 offshore bidding round with higher incentives.
The joint venture of ConocoPhillips and Statoil submitted bids for all the three blocks and has already become responsive to the Petrobangla's evaluation for inking PSC.
But the government has decided to offer two new deepwater blocks instead of three chosen.
It has not been decided which two blocks will be awarded to the joint venture.
azizjst@yahoo.com
ConocoPhillips operation in two deepwater blocks ends
M Azizur Rahman | Published: December 18, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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