ConocoPhillips of the US has made exit again from signing of production-sharing contracts (PSCs) with state-run Petrobangla and the government for oil and gas exploration in the Bay of Bengal, said officials.
"It has refused to ink PSCs for three deepwater blocks, which was awarded jointly to it and Norwegian Statoil for oil and gas exploration in the Bay," energy and mineral resources division secretary Md Abubakar Siddique said.
"The representatives of the joint venture of ConocoPhillips and Statoil came to me and informed me of the US firm's exit from the blocks," he added.
ConocoPhillips submitted a written application explaining its latest position over its decision not to sign PSCs for the three deepwater blocks-DS-12, DS-16 and DS-21, said Mr Siddique.
When contacted, ConocoPhillips managing director for Bangladesh operations Tom Early confirmed the US firm's exit.
"Unfortunately, Bangladesh is no longer a strategically fit in our portfolio," he told the FE in an email interview Thursday.
ConocoPhillips is responding to the recent price downturn by reducing capital and expenditure programmes across all its businesses, he said.
"We understand the disappointment with our decision not to move forward with the PSCs related to Blocks 12, 16 and 21," said Mr Early.
The Petrobangla early this month awarded these three deepwater blocks to the JV for oil and gas exploration, 28 months after initial bidding and subsequently invited the joint venture to ink PSCs with the Petrobangla and the government of Bangladesh to initiate oil and gas exploration activities and ease the South Asian country's looming energy crisis.
Earlier, in January this year, the JV had sought provision of annual 2.0 per cent hike in natural gas price beginning earlier than its first production from these deepwater blocks in the Bangladesh territory in the Bay of Bengal.
Justifying the demand, Mr Early had then told the FE, "We have proposed that escalation of the gas price begin earlier than the first production, which is similar to what is in place in neighbouring countries like Myanmar and Thailand."
The annual hike of natural gas price by 2.0 per cent from the first gas production was one of the revised provisions made by the Petrobangla to lure international oil companies for oil and gas exploration in three deep-water blocks under the 2012 bidding round.
This is, however, ConocoPhillips' third exit from oil and gas exploration in the Bay of Bengal.
It earlier closed its operations from two separate deepwater blocks-DS-08-10 and DS-08 -11 -- on December 15, 2014 after carrying out 2D seismic surveys due to 'poor' fiscal terms.
It had inked PSCs for carrying out oil and gas exploration activities in these two deep-water blocks in June 2011.
ConocoPhillips in April last year also had backed out from signing a deal for shallow-water block SS-07 as the fiscal terms were deemed not supportive.
This is a big setback for the country's future energy security as it has been failing again to attract international oil companies (IOCs) to carry out hydrocarbon exploration in offshore, said Professor M Tamim of Bangladesh University of Engineering and Technology (BUET).
He, however, hoped that the IOCs would be interested for exploration in the Bay once the seismic data becomes available.
The Petrobangla has already moved to carry out seismic surveys in the offshore areas in the Bay of Bengal.
Officials said Bangladesh has been trying to develop resources offshore in the Bay of Bengal, but has made little progress so far.
The country is currently dependent on onshore fields for its entire natural gas output.
Gas production at present is running at around 2,500 million cubic feet per day (mmcfd) against the demand for above 3,000 mmcfd.
Short supply of natural gas has forced the government to ration natural gas supplies to industries, power plants and fertiliser factories.
mazizur.rahman@outlook.com
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