The government has planned to invite international oil companies (IOCs) afresh to award two deepwater blocks in the Bay of Bengal on higher fiscal terms for hydrocarbon exploration, officials said.
Petrobangla has already sent a proposal to the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources for the green signal for launching a fresh bidding round to this end, a high official of the state entity said Monday.
Md Quamruzzaman, Petrobangla director for production-sharing contract (PSC), further told the FE that these deepwater blocks -- DS-08-10 and DS-08-11 -- were earlier awarded to ConocoPhillips under the country's 2008 international bidding round. But the US firm found its fiscal terms relatively 'poor'.
The PSCs on these two blocks with the US firm were Bangladesh's first deep-water-exploration contract.
ConocoPhillips had inked PSC with Petrobangla on June 16, 2011 for these blocks and subsequently carried out 2D seismic survey, but terminated the PSC on December 15, 2014.
"The US firm had informed us that there was a possibility of having around 3.0 Tcf natural gas reserve there," Mr Quamruzzaman said, quoting the 2D survey report of the ConocoPhillips.
"We shall provide 2D data to the bid-winning contractor to facilitate exploration," he said.
During termination of contract on these blocks, Managing Director of ConocoPhillips Bangladesh Tom Earley told the FE that it had decided to terminate operations in Bangladesh's two deep-water blocks finding 'non- viable prospects'.
Prior to breaking up, ConocoPhillips had sought upward revision of fiscal terms in the PSCs and held talks with State Minister for Power, Energy and Mineral Resources Nasrul Hamid. The minister then informed the US firm about Bangladesh government's inability to redo the PSC provisos.
ConocoPhillips was seeking 2.0 per cent hike in natural gas tariff annually and wanted Bangladesh to build a subsea natural gas pipeline to carry the gas to be produced in the two blocks from deep sea to shore.
The fiscal terms in the PSCs for these two deep-water blocks under the 2008 bidding round were relatively less lucrative compared to the subsequent bidding round launched in 2012.
Bangladesh in 2012 revised fiscal terms in the model PSC to make the bidding attractive to international oil companies.
The revisions included significant fiscal and commercial improvements, such as higher price for the gas, annual price hike by 2.0 per cent, enhanced annual cost-recovery limits, tax waiver for contractors for the entire life of the project, no transmission tariff, and scope to sell the gas to any third party within the country.
The price of gas from the deepwater blocks under the 2012 ratings was pegged to high-sulphur fuel oil (HSFO) prices and the floor price for HSFO fixed at $100 per tonne and the ceiling price at $200 per tonne.
But the price of gas under 2008 bidding was linked 100 per cent to HSFO prices, with the floor price set at $70 per tonne and ceiling at $180 a tonne.
There were no provisions of annual hike of hydrocarbon prices, and no exemption from paying a wheeling charge to the Petrobangla for transporting gas to end-users in the 2008 model PSC.
ConocoPhillips would have to pay 37.5 per cent corporate tax annually had it continued operations in the two deep-water blocks.
Mr Quamruzzaman said the fiscal terms for the two deep-water blocks to be offered afresh would have higher fiscal terms like that of 2012 bidding to encourage bidders.
mazizur.rahman@outlook.com
Two gas blocks in Bay up for fresh bidding
M Azizur Rahman | Published: July 28, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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