Law ministry vetting on US cos' rights to be sought

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FE Report
The government will ask for law ministry vetting to decide on rights of two US oil minnows for conducting oil and gas explorations in hydrocarbon blocks 17 & 18 relinquished by the biggies, officials said Saturday.
"Legal opinion is required and a thorough scrutiny of the production sharing contract (PSC) signed between the block stakeholders and the Petrobangla is necessary to settle the issue, which is first of its kind in the country," Petrobangla Director M Muqtadir Ali told the FE.
Issues like paying bank guarantee worth US$6.0 million to Petrobangla and proper work plan to explore the hydrocarbon structures by the US companies are also required, he said.
This is for the first time in the history of Bangladesh's search for hydrocarbon when any stakeholder sought exploration rights for hydrocarbon blocks after other stakeholders had surrendered their rights.
The US firms Oakland and Rexwood that had an accumulated 8.0 per cent stakes in the 18,367 square kilometre blocks now seeks 100 per cent exploration rights following exit of their major partners -French oil giant Total, Irish Tullow and Thai PTTEP.
Earlier this month, the operator Total and its partners announced both these structures commercially non-viable for explorations, after investing around $30 million in surveys.
They had found gas reserves of around 275 billion cubic feet (Bcf) at Teknaf structure near St Martins 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 the Oakland-Rexwood joint venture thought otherwise and held talks with the state-owned Petrobangla seeking exploration rights on block Nos 17 & 18.
"We have sought extension of the existing PSC for these structures by one year to reassess the survey findings by ourselves," an Oakland official said.
The Oakland would not hesitate to pay bank guarantee as sought by the Petrobangla, he said. The official said the initial data indicate that the structures would be economically feasible.
The lion partners have left the structures, as they felt discouraged to invest further on such tinny reserve, the Oakland official said.
"We want to take these blocks as a challenge," he said.
Petrobangla awarded both blocks 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.
Tullow later bought a majority stake from the Oakland-Rexwood joint venture, then sold 60 per cent to Total in 2006, which last year sold half of its stake to PTTEP.