Block mapping upsets IOCs over reduced areas
Tuesday, 22 December 2009
M Azizur Rahman
A row over delineation of gas blocks between the government and the international oil companies (IOCs) is delaying signing of deals to initiate exploration in the country's prospective offshore structures in the Bay of Bengal, officials said Monday.
State-owned Petrobangla officials said the US oil giant ConocoPhillips and the Irish Tullow were discontented with the government decision to allow them to sign production sharing contracts (PSCs) for a reduced number of blocks having smaller sizes.
The ConocoPhillips was the lowest bidder for eight offshore blocks out of the total 28 that the government had offered during the country's latest offshore bidding round launched in February 2008.
But the government offered the company to sign PSCs only for two offshore blocks -- DS-08-10, DS-08-11-- and it also asked them to refrain from carrying out exploration works in the disputed areas inside these blocks.
The government offered Tullow the offshore gas block -- SS-08-05 -- as it became the lowest bidder for the block and asked them to avoid exploration in the disputed area inside the block.
Both ConocoPhillips and Tullow held talks with Petrobangla recently and conveyed their 'disappointments' over the government decision on the block delineation, a senior energy ministry official said.
"ConocoPhillips argued that it should be awarded all the eight offshore gas blocks that the company had as the lowest bidder," Petrobangla chairman Dr Hossain Monsur told the FE.
He said the government is unlikely to offer all the eight blocks to ConocoPhillips as the government has already taken decision to award two blocks to them.
Sensing the government's rigid stance over signing of two blocks with the US company, the ConocoPhillips also proposed that it would sign PSCs for two blocks now, but in the future the government should award the remaining six blocks to the company when it decides over awarding these blocks.
The Petrobangla chairman remained 'mum' over the Conoco's latest stance.
During the negotiation with Petrobangla, Tullow proposed that it should be given exploration rights over a portion of areas in the adjacent gas block - SS-08-06 - as compensation for leaving the disputed area from inside its block.
Petrobangla is not interested in the Tullow proposal either as it maintains the decision lies with the government high-ups since decision for signing three PSCs came from the high-power cabinet committee.
"We have sent a detailed view elaborating the IOCs' pleas over signing the PSCs to the energy ministry last week," said newly appointed Petrobangla director for PSC Md Imaduddin.
He said the issue of signing PSCs with the IOCs would now depend on the energy ministry's guidelines.
Foreign ministry officials said the dispute over maritime boundary with the neighbouring India and Myanmar has prompted the government to decide to award only three offshore blocks after inviting bids for 28.
A row over delineation of gas blocks between the government and the international oil companies (IOCs) is delaying signing of deals to initiate exploration in the country's prospective offshore structures in the Bay of Bengal, officials said Monday.
State-owned Petrobangla officials said the US oil giant ConocoPhillips and the Irish Tullow were discontented with the government decision to allow them to sign production sharing contracts (PSCs) for a reduced number of blocks having smaller sizes.
The ConocoPhillips was the lowest bidder for eight offshore blocks out of the total 28 that the government had offered during the country's latest offshore bidding round launched in February 2008.
But the government offered the company to sign PSCs only for two offshore blocks -- DS-08-10, DS-08-11-- and it also asked them to refrain from carrying out exploration works in the disputed areas inside these blocks.
The government offered Tullow the offshore gas block -- SS-08-05 -- as it became the lowest bidder for the block and asked them to avoid exploration in the disputed area inside the block.
Both ConocoPhillips and Tullow held talks with Petrobangla recently and conveyed their 'disappointments' over the government decision on the block delineation, a senior energy ministry official said.
"ConocoPhillips argued that it should be awarded all the eight offshore gas blocks that the company had as the lowest bidder," Petrobangla chairman Dr Hossain Monsur told the FE.
He said the government is unlikely to offer all the eight blocks to ConocoPhillips as the government has already taken decision to award two blocks to them.
Sensing the government's rigid stance over signing of two blocks with the US company, the ConocoPhillips also proposed that it would sign PSCs for two blocks now, but in the future the government should award the remaining six blocks to the company when it decides over awarding these blocks.
The Petrobangla chairman remained 'mum' over the Conoco's latest stance.
During the negotiation with Petrobangla, Tullow proposed that it should be given exploration rights over a portion of areas in the adjacent gas block - SS-08-06 - as compensation for leaving the disputed area from inside its block.
Petrobangla is not interested in the Tullow proposal either as it maintains the decision lies with the government high-ups since decision for signing three PSCs came from the high-power cabinet committee.
"We have sent a detailed view elaborating the IOCs' pleas over signing the PSCs to the energy ministry last week," said newly appointed Petrobangla director for PSC Md Imaduddin.
He said the issue of signing PSCs with the IOCs would now depend on the energy ministry's guidelines.
Foreign ministry officials said the dispute over maritime boundary with the neighbouring India and Myanmar has prompted the government to decide to award only three offshore blocks after inviting bids for 28.