Decision on lease of offshore blocks tomorrow

FE Team | Published: July 22, 2009 00:00:00 | Updated: February 01, 2018 00:00:00

M Azizur Rahman
The long pending lease of offshore blocks to US ConocoPhilips and Irish Tullow will be decided in the meeting of the cabinet committee on economic affairs Thursday (tomorrow), said officials.
The economic affairs committee, headed by Finance Minister AMA Muhith, is set to pick several offshore blocks for leasing to the international oil companies (IOCs) to expedite oil and gas hunt in the Bay of Bengal, energy secretary Mohammad Mohsin told the FE Tuesday.
The committee's decision will end a year long uncertainty relating to awarding of the offshore blocks, previously selected by the state-owned Petrobangla, to the IOCs for exploration.
Both ConocoPhilips and Tullow wrote several times to the energy ministry to know the fate of the blocks they were selected for.
"Petrobangla will ink agreements with the respective IOCs for offshore oil and gas exploration after the decision of the economic affairs committee," said the ministry official.
Earlier, the energy ministry recommended assigning less than half of the total nine offshore blocks previously selected by Petrobangla under the country's latest offshore bidding round launched in February 2008.
"We have gone through the bidding process with due diligence and concluded that several offshore blocks could be awarded to the US giant ConcoPhilips and Irish Tullow," Mr Mohsin said.
Fresh international tender would be floated for the remaining blocks.
The previous caretaker government had conducted the offshore bidding process last August, but had kept the decision on awarding the blocks for the elected government to take.
However, while inviting bids in February 2008 the caretaker government had pledged to sign the contracts by October 2008.
US oil giant ConocoPhillips was selected by Petrobangla for eight offshore blocks and Irish Tullow for one block.
The Petrobangla made the selections after evaluating offers from companies including China's CNOOC, Australia's Santos and the Korean National Oil Corporation.
If awarded the blocks, ConocoPhillips and Tullow would be given up to nine years for exploration.
The two IOCs pledged to invest a total of $492.52 million in exploration if they were awarded in all the nine blocks.
ConocoPhillips offered to invest $442.67 million and offered a bank guarantee of the same amount, while Tullow committed to invest $49.85 million and offered a bank guarantee of $33.9 million.
As the energy ministry has recommended downsizing awarding the offshore blocks to the IOCs, the ConocoPhilips is expected to get several blocks among the -- DS-08-10; DS-08-11; DS-08-12; DS-08-15; DS-08-16; DS-08-17; DS-08-20 and DS-08-21.
Tullow Bangladesh is expected to be awarded the only shallow-depth block SS-08-05.
As of now, Cairn Energy-operated Sangu gas field is the country's lone operational offshore gas field.
International oil companies have been awarded only 12 hydrocarbon blocks -- both onshore and offshore -- since gas exploration began in the country in late 1960s.
But they now hold only six blocks having given up the rest.
The leasing of the Bangladesh's onshore hydrocarbon blocks to international oil companies is now halted following a court order.
The government forecasts that the country's current gas reserves will run out by 2014-2015 at present consumption rates.
At present, proven gas reserves are 7.3 Tcf, while the probable reserves are 5.5 TCF.
The country currently produces gas around 1,900 mmcfd against demand for over 2,150 mmcfd.