Petrobangla has sought government nod to award three deepwater blocks to Statoil of Norway and ink production-sharing contracts (PSCs) with the Norwegian firm for hydrocarbon exploration in the Bay of Bengal.
"We have sent a proposal to the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) on the matter and we are now waiting for the MPEMR decision," Petrobangla chairman Istiaque Ahmad told the FE Monday.
He said the state-owned petroleum corporation will invite Statoil to ink PSCs for oil and gas exploration in the deepwater blocks DS-12, DS-16 and DS-21 with the MPEMR seal of approval.
Officials said the Norwegian firm has shown interest in inking PSCs to explore three deepwater blocks alone in Bangladesh as its US-based joint-venture partner ConocoPhillips backed out from signing the PSCs.
Petrobangla had earlier awarded the JV the job of exploring oil and gas in the three blocks under the 2012 bidding round and invited to ink PSCs.
But ConocoPhillips refrained from signing the PSCs on the excuse of 'poor fiscal terms.'
"Unfortunately, Bangladesh is no longer a strategic fit in our portfolio," ConocoPhillips managing director for Bangladesh operations Tom Early told the FE in an email interview after its decision on pullout.
ConocoPhillips and Statoil had 50:50 stakes in the JV and with the pulling out of the US firm Statoil would now own 100 per cent of the business cake.
Before leaving the blocks, the ConocoPhillips-led JV in January last had sought a provision for annual 2.0 per cent hike in natural gas prices beginning earlier than at first production for these deepwater blocks.
However, Statoil is also interested in hike of the gas prices earlier than at first production, Petrobangla's director for PSC Md Quamruzzaman told the FE.
He said the Norwegian firm sought price adjustments in line with the rate of inflation.
The annual hike in natural gas price by 2.0 per cent from first gas production was one of the revised provisions made by Petrobangla to lure international oil companies into the three blocks under the 2012 bidding round, he said.
If inked, the PSC will be Statoil's first-ever contract to get involved with the hydrocarbon-exploration activities in Bangladesh.
Petrobangla invited bids in December 2012 from the international oil companies for a total of 12 offshore blocks--these three deepwater ones and nine in shallow water.
Bangladesh later suspended the bidding procedure for these deep blocks and re-launched the bidding for them again in October 2013 after revising the fiscal terms and other benefits, he said.
The JV of ConocoPhillips and Statoil had submitted bids and emerged single bidder for all the three deepwater blocks offered under that bidding round.
Bangladesh is trying to develop resources in the Bay of Bengal--especially after establishing sovereign rights on the territorial waters through international arbitration--but has seen little progress so far.
The country is currently dependent on onshore fields for its entire natural gas output to fuel the economy and household activities.
Gas production at present is running at about 2,640 million cubic feet per day (mmcfd) against the demand for above 3,000 mmcfd.
Short supply of natural gas has pushed the government into an option for rationing supplies to industries, power plants and fertilizer factories.
mazizur.rahman@outlook.com
