Statoil interested in PSCs on three deepwater blocks

M Azizur Rahman | Published: May 15, 2015 00:00:00 | Updated: November 30, 2026 06:01:00

The Norwegian Statoil has shown interest in inking production sharing contracts (PSCs) before exploring three deepwater blocks alone in Bangladesh as its US-based joint venture (JV) partner ConocoPhillips has backed out from signing the PSCs, officials have said.
A representative of the Statoil conveyed its latest stance on the PSC signing in a recent meeting at the Bangladesh Secretariat in Dhaka, Energy and Mineral Resources Division (EMRD) secretary Md Abubakar Siddique told the FE on Thursday.
He said the EMRD had been working to implement ConocoPhillips's exit from the JV. Before the pullout, the ConocoPhillips and Statoil had their two equal stakes in the JV.
The three deepwater blocks are DS-12, DS-16 and DS-21, all located in the Bay of Bengal in a depth of over 200 metres.
The state-owned Petro- bangla earlier awarded the JV the job of exploring oil and gas in the three blocks under the 2012 bidding round.
A couple of weeks ago the ConocoPhillips informed the government of Bangladesh and the Petrobangla of its unwillingness to sign the PSCs.
"Unfortunately, Bangladesh is no longer a strategic fit in our portfolio," ConocoPhillips managing director for Bangladesh operations Tom Early told Platts in an email interview after its decision on April 30.
ConocoPhillips was responding to the recent price downturn by reducing the capital and expense programmes across all of its businesses, he said.
The JV partners in January last had sought a provision for annual 2.0 per cent hike in natural gas price beginning earlier than at first production for these deepwater blocks.
However, the Statoil is also interested in hike of the gas price earlier than at first production, Petrobangla's director for PSC Md Quamruzzaman told the FE.
He said the Norwegian firm sought price adjustment in line with the rate of inflation.
The annual hike of 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 for the three blocks under the 2012 bidding round, he said.
If inked, the PSC will be the Statoil's first-ever contract to get involved with the oil and gas exploration activities in Bangladesh.
Petrobangla invited bids in December 2012 from the international oil companies for a total of 12 offshore blocks including these three deepwater blocks and nine in shallow water.
Bangladesh later suspended the bidding procedure for these deep water blocks and re-launched the bidding for them again in October 2013 after revising the fiscal terms and other benefits, he said.
The ConocoPhillips and Statoil jointly submitted bids and emerged the single bidder for all the three deepwater blocks offered under that bidding round.
Bangladesh is trying to develop resources in the Bay of Bengal, but has made little progress so far.
The country is currently dependent on onshore fields for its entire natural gas output.
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 to ration supplies to industries, power plants and fertilizer factories.
mazizur.rahman@outlook.com