Urgency to explore Bay gas

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M Azizur Rahman
The energy ministry has asked the foreign ministry to demarcate disputed areas of offshore gas blocks to sign contracts with the bid winning foreign firms and conduct oil and gas exploration in the Bay of Bengal, officials said Sunday.
"We have sent a letter to the foreign ministry recently to exactly demarcate the disputed offshore gas blocks on the basis of geographic coordinate system to initiate exploration in the dispute-free areas," a top energy ministry official told the FE.
The ministry would sign production sharing contracts (PSCs) with two international oil companies - US ConocoPhillips and Irish Tullow - for three offshore gas blocks after getting their coordinates from the foreign ministry, he added.
"Otherwise we may face trouble," he said.
Signing of PSCs with the IOCs remained stalled for over the past two years over the country's maritime boundary dispute with the two neighbouring countries - India and Myanmar.
Both the companies have pledged to invest a total of US$ 160.50 million in their bids for hydrocarbon explorations in the three approved offshore blocks.
"We are waiting on government decision for signing PSCs with the ConocoPhillips and Tullow," Petrobangla director for PSC Muhammad Imaduddin told the FE Sunday.
"We are ready to sign the PSCs as soon as we get signal from the government," he added.
The bidding for offshore gas blocks was launched during the previous caretaker government in February 2008.
The cabinet committee on economic affairs of the incumbent government stamped its seal of approval to lease out two deep-water offshore gas blocks - DS-08-10 and DS-08-11 to ConocoPhillips and one shallow water block SS-08-05 to Tullow in August 2009.
All these three blocks became disputed as the neighbouring India and Myanmar raised objections claiming that some areas of these blocks overlapped with theirs.
Since then no headway has been made in signing PSCs, apart from several rounds of negotiations with the ConocoPhillips and Tullow.
Both the foreign hydrocarbon firms have intended to sign PSCs for dispute-free areas of the blocks with the state-owned Petrobangla.
Officials said Petrobangla primarily had selected ConocoPhillips and Tullow for a total of nine offshore blocks.
The ConocoPhillips was selected by Petrobangla for 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 blocks, while Tullow for SS-08-05.
But the energy ministry recommended leasing out only two offshore blocks to ConocoPhillips, as the official said the government had a policy not to award more than two blocks to a single company.
For offshore exploration ConocoPhillips pledged to invest $110.66 million and offered a bank guarantee of the same amount for the two blocks it got approval for, while Tullow committed to invest $49.85 million and offered a bank guarantee of $33.9 million.
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 the late 1960s.
But they now hold only six blocks having given up the rest.
The country is now reeling under acute gas crisis with the supply hovering around daily 2000 million cubic feet (mmcf) against the daily demand for over 2,500 mmcf.
The government has already halted new gas connections, closed down five fertiliser factories and introduced staggered holiday in industries to cope with the short supply of gas.
It has moved to import liquefied natural gas (LNG) for the first time in the country and ramp up import of bottled liquefied petroleum gas (LPG) to ease the mounting demand.