India's hydrocarbon-exploration company ONGC Videsh Ltd (OVL) has sought extension of its contract tenure again having failed to appoint a drilling contractor due to high cost quotes, sources say, while Bangladesh reels from energy shortages.
If extended, it would be a third-time extension of the tenure of production-sharing contract (PSC) between the OVL and state-run Petrobangla.
Petrobangla earlier had extended the tenure of the PSC with the OVL by two more years until February 2023 to rachet up offshore exploration for gas and oil the shortages of which have squeezed Bangladesh's power production with cascading effects on daily life and the economy.
The deal with the Indian firm expired in February 2021 after an initial two-year extension.
Petrobangla had signed two PSCs with OVL, the operator of shallow- water offshore blocks SS-04 and SS-09, on February 17 in 2014, which expired in February 2019.
The company is contractually pledge- bound to complete the drilling of two more wells- Titly in block SS-04 and Moitree in block SS-09, both in shallow waters-within next six months if the deal gets extended life further, a senior Petrobangla official told the FE Saturday.
"The Indian firm floated tenders twice to engage a drilling contractor to carry out the drilling of Titly and Moitree wells but got exorbitant price quotes worth around US$11 million, almost double its budget," he added.
The company has a budget to complete drilling both the wells at a cost of US$ 65 million.
"The Indian firm is yet to engage any drilling contractor as the latter is seeking higher- than- expected drilling costs," the official said.
It sought extension of the PSC tenure with the hope that the contractors will demand less drilling costs after several months with the easing of current global energy- market turmoil, he added.
A couple of months back, the firm 'failed' to discover any presence of hydrocarbons in Kanchan gas well in Bangladesh's shallow-water gas- block SS-04.
It plugged and abandoned the well subsequently, stating that there was no find.
The ONGC had drilled beyond its targeted depth of around 4,228 metres beneath the surface in search of a commercially viable gas deposit at Kanchan of Moheshkhali island in the Bay of Bengal.
Plugging and abandoning the well means the well does not have prospect of hydrocarbon reserves.
Instead, the Indian firm could find only huge deposits of clay and shell-stone sequence during the drilling in absence of sandstone, meaning there is no gas-reserve prospect there.
The drilling of the Kanchan well was the first offshore drilling in the country's maritime territory in five years, gas exploration appeared to have lost gear.
Australian oil-and-gas-exploration-company Santos along with state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) earlier in February 2017 drilled offshore Magnama-2 well under Block 16. But it was also found dry, after drilling into a depth of around 3,200 metres.
This fruitless drilling cost BAPEX around US$29 million.
There are also no producing offshore gas wells in the country and the entire natural gas output comes from onshore gasfields as well as import of liquefied natural gas (LNG).
The OVL, the operator of blocks SS-04 and SS-09, has participating interests of 45 per cent, Oil India Limited (OIL) holds 45 per cent participating interests and the Bangladesh Petroleum Exploration and Production Company Limited or BAPEX holds the remaining 10 per cent. The Block SS-04 covers an area of 7,269sqkm while the Block SS-09 stretches over an area of 7,026sqkm. Water depth of both the blocks ranges between 20 and 200 metres.
As per the PSC, the OVL is committed to conducting 2,700 line-kilometre 2D seismic data-acquisition and-processing and one exploratory well in Block SS-04 and 2,700 line-kilometre 2D seismic data-acquisition and-processing and two exploratory wells in Block SS-09.
The firm will be allowed to operate and sell oil and gas for 20 years from an oilfield and 25 years from a gasfield. It has already completed around 3,100 line-kilometre 2D seismic surveys for both the blocks.
© 2024 - All Rights with The Financial Express
