The government has rejected a plea of Australian Santos and its partner US's Oakland to explore jointly two gas blocks and sell output to private buyers, officials said Wednesday. The energy ministry has informed Santos and Oakland officially that it will not approve their joint venture (JV) proposal to allow gas sale to private buyers, said the official. It will rather put both the gas blocks 17 and 18 on offer for exploration in the country's forthcoming bidding round to be launched in June this year, an energy ministry official said. A company insider, however, said the joint venture of Santos and Oakland will continue their move of getting exploration rights in these Bangladesh blocks. Santos and Oakland had sought exploration rights in two Bangladesh gas blocks that were relinquished by French oil giant Total and its partners in 2009. The Australian firm had teamed up with the US oil minnow Oakland International LDC to conduct exploration in blocks no 17 and 18 spreading over 18,000 square kilometres around Cox's Bazar and parts of the Bay of Bengal. A joint venture of Oakland and Rexwood had earlier tied with French oil giant Total and jointly withdrew from the blocks citing those 'commercially non-viable for explorations.' Total was the operator of both the blocks before withdrawing from the same. The joint venture of Oakland-Rexwood has later emerged as Oakland International LDC. Santos and Oakland had submitted the proposal to Petrobangla within months after Total and its partners gave up rights over both the blocks. Total and its partners had earlier invested around US$ 30 million to conduct seismic and 3D surveys before declaring both these structures commercially non-viable in March 2009. They had found gas reserves of around 275 Bcf at Teknaf structure near St Martin's Island in the Bay of Bengal but deemed this reserve would not be economically viable and subsequently gave up their exploration rights on these blocks. But Santos and Oakland had sought exploration rights over the blocks on condition that they would be able to sell output to private users at a higher price. Santos and Oakland had shown interest to sign a PSC (production sharing contract) amendment agreement to this effect. The joint venture had demanded to sell gas to third parties to get higher return as the costs of exploration in offshore gas fields have gone up, the company official added. Officials said the government's approval to Santos' predecessor UK's Cairn Energy to sell gas to private buyers from block no 16 by amending a PSC clause has prompted the Santos and its partner to table a similar proposal. State-owned Petrobangla had initially awarded both the blocks 17 and 18 to the Oakland-Rexwood joint venture during its first round of energy bidding in January 1997, but they did not carry out exploration due to poor gas demand in the country at that time. Irish Tullow later bought a majority stake from the JV, and then sold 60 per cent stake to Total in 2006, which last year sold half its stake to Thai PTTEP.
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