No new onshore blocks for IOCs, Bapex assigned exploration task

---

M Azizur Rahman Bangladesh will not hand over any new onshore blocks for oil and gas exploration by international oil companies (IOCs) in future as the country's lone exploration company Bapex will explore and develop those, a top official said Saturday. "We will keep the country's remaining onshore blocks for exploration only by state-run Bangladesh Petroleum Exploration and Production Company Ltd (Bapex)," Petrobangla Chairman Dr Hussain Monsur said. Only the offshore blocks -- both in shallow and deep waters in the Bay of Bengal -- will remain open for the IOCs for exploration, the Petrobangla chief said. The Petrobangla's decision of not offering onshore blocks to IOCs might disappoint some foreign firms including US-based Chevron, which were eyeing to get engaged more in new onshore blocks in the country, said sources. Chevron Bangladesh President Geoffrey Strong in late May, 2013 had sought new onshore blocks for international participation saying, "The government should release more acreage for exploration, including onshore to harness the capabilities of the private sector." The Bapex, a wholly-owned subsidiary of the Petrobangla incorporated in April 1989, got experience to carry out oil and gas exploration only in onshore areas, Mr Monsur said. The state-owned company neither has expertise nor financial strength to conduct oil and gas exploration in offshore areas, Mr Monsur said justifying the decision of keeping onshore blocks for the Bapex. Bangladesh has not offered any onshore oil and gas blocks for exploration since 1997. Currently a bid round has been opened for six shallow water oil and gas exploration blocks. These attracted no bids in its 2012 offshore bidding round, which closed in April 2013, after receiving bids for only three of the nine shallow water blocks it offered. The Petrobangla suspended bidding for three deepwater blocks as it attracted little interest in 2012 bidding round. It has further sweetened the production-sharing contract terms for the deep-water blocks and is awaiting final Cabinet Committee approval for the changes, which have been endorsed by the Energy Ministry, and is yet to announce the new deadline for bids. Currently almost all the natural gas production comes from onshore gas fields as the onshore fields contribute around 2,263 million cubic feet per day (mmcfd) of gas, while the only operating offshore Sangu-11 well produces only 4.0 mmcfd, according to Petrobangla data as on July 25, 2013. Of the onshore productions, the IOCs are sharing around 1,240 mmcfd or 54.69 per cent of the country's overall output, while the state-owned gas companies including the Bapex contribute the 1,047 mmcfd of gas, Petrobangla statistics reveals. The Bapex currently supplies around 123 mmcfd of gas from 11 onshore producing wells in six gas fields across Bangladesh, the data shows. The country's overall natural gas production will, however, entirely depend on onshore gas fields alone soon as the Sangu-11 well in the Bay of Bengal will permanently be shut by September next, the operator Australian oil and gas exploration and production company Santos said last week. The IOCs are currently operating in eight blocks in the country -- five onshore and three offshore. Chevron has production-sharing contracts (PSCs) for onshore blocks 7, 12, 13 and 14, Irish Tullow Oil onshore gas block 9, ConocoPhillips deepwater offshore blocks DS-08-10 and DS-08-11, and Santos shallow water block 16. Gas is now being produced from Chevron's blocks 12, 13 and 14, Tullow's block 9 and Santos' block 16. Bangladesh inked its latest production-sharing contract with ConocoPhillis on June 16, 2011, one decade after its previous PSC with Shell Oil and Cairn Energy in July 2001. Energy expert Professor M Tamim, who was special assistant on energy issues to Bangladesh's former government, however, said the country requires more oil and gas exploration activities both in onshore and offshore blocks to ensure the country's future energy security. Like those of offshore blocks, the government should open up onshore blocks too for exploration by the IOCs, Mr Tamim, who is also a Professor of Bangladesh University of Engineering and Technology (BUET), added.