US oil giant ConocoPhillips is lobbying with the Energy Ministry to get state-owned Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) as a joint venture (JV) partner to carry out further exploration in its two deep-water blocks.
The blocks are in the Bay of Bengal, a top official said Tuesday.
He said the US firm was eyeing to get BAPEX as a JV partner for further exploration in deep-water blocks DS-08-10 and DS-08-11 blocks, which were awarded in June 2011, under Bangladesh's 2008 bidding round.
ConocoPhillips did not provide details on how much stake it had planned to offer to Bapex under the proposed JV.
"The US firm is interested to involve BAPEX in further explorations in the two deep-water blocks sensing the 'bleak prospect' of the blocks," a senior Petrobangla official alleged.
It wants to minimise the costs of carrying out the mandatory work programmes by sharing exploration costs with BAPEX, he said.
In the production sharing contract (PSC) signed with Petrobangla and the government, the US firm has provided guarantee worth US$ 52 million for initial exploration period, $58 million for the first extension period and $50 million for the second extension period.
Under the PSC, the US firm, however, is bound to drill one exploration well in each of the blocks within five years of the contract period, he added.
Minimum bid work programme includes 973 line kilometre (km) seismic survey and two well drilling during initial exploration period, 500 square km 3D seismic survey, and two exploration well drilling during the second extension period.
Under the PSC, ConocoPhillips will get a total of nine years to carry out exploration works -five years as primary exploration period and two years each for first and second extended exploration periods respectively.
The Energy and Mineral Resources Division under the ministry of power, energy and mineral resources (MPEMR) has already discussed the issue last week and formed a committee to review the technical and financial aspects of the proposed JV with ConocoPhillips, said the official.
The committee would give its recommendations based on its findings immediately to Petrobangla, he added.
When contacted, Petrobangla chairman Hussain Monsur said a formal proposal from ConocoPhillips over the issue was necessary before taking a decision on it.
"The US firm has not yet provided any formal proposal to us over the issue," he said.
ConocoPhillips signed a PSC on June 16, 2011, for carrying out exploration activities in the two deep-water blocks.
The PSC is Bangladesh's first deep-water exploration contract.
The company in 2013 performed 2D seismic survey activities on these blocks.
High sulfur fuel oil (HSFO) price has been fixed at US$ 70 per tonne as the floor price, and $180 per tonne as the ceiling price for natural gas for these two deep-water blocks.
ConocoPhillips is bound to pay corporate taxes on its own.
Petrobangla now pays corporate taxes on behalf of all other international oil companies (IOCs) operating in Bangladesh.
ConocoPhillips will not be able to export piped gas from the two deep-water gas blocks.
The US firm will, however, be able to export gas only in liquefied natural gas (LNG) form provided it gets consent from Petrobangla.
Petrobangla will have the first right of refusal in this regard. If Petrobangla does not accept to purchase LNG within six months, the contractor will have the right to sell its share in domestic market to a third party.
ConocoPhillips last month refused to ink a PSC with Bangladesh for oil and gas exploration in shallow-water block SS-07, which was offered in 2012 bidding round, seven months after signing an initial PSC.
ConocoPhillips has declined to sign the final PSC for block SS-07 saying that the block lies in deep waters and not shallow waters as stated by Petrobangla, which makes the existing fiscal terms for the block unfavourable, said a Petrobangla official.
ConocoPhillips said that after further evaluation, it had found that block SS-07 located offshore Bangladesh in the Bay of Bengal was no longer competitive in the company's portfolio, and hence had notified Petrobangla that it could not sign the PSC under the current terms.
The company together with Norway's Statoil submitted a bid in January for the three deep-water blocks offered in the 2012 licencing round.
Bids for those blocks are currently under evaluation by Petrobangla.
