ConocoPhillips leaves two DW blocks in mid-Dec

The US oil and gas giant ConocoPhillips' exit from two deep-water (DW) blocks in the Bay of Bengal will formally be effective from the next month, turning the country's overall outcome from the 2008 offshore bidding round to 'zero'.  
The US firm has already wrote letters to the state-owned Petrobangla, spelling out its decision to pull out from the two DW blocks - DS-08-10 and DS-08-11, a senior Petrobangla official told the FE Tuesday.
"We have [therefore] decided not to continue petroleum operations [in these two blocks], and the PSC will terminate on 15 December 2014," managing director of ConocoPhillips Bangladesh Tom Earley said.
The US firm in late October informed Petrobangla of its inability to continue exploration in these two blocks, citing them non-viable.
ConocoPhillips invested around US$20 million to carry out two-dimensional (2-D) seismic surveys in the blocks, and found 20 per cent prospect.
The firm did not drill any well during the initial exploration period of the production sharing contract (PSC), although it was extended by six months in this June.
With the exit of ConocoPhillips, not a single offshore oil and gas block in the Bay, offered in the 2008 bidding round, is left for exploration.
During the bidding Petrobangla offered a total of 28 offshore blocks - 20 in deep water and eight in shallow water.
But Petrobangla could award only parts of two DW blocks - DS-08-10 and DS-08-11 - to ConocoPhillips, and that too after a series of meetings and three years after launching the bidding round on June 16, 2011.
Although Petrobangla selected the UK's Tullow for shallow water block SS-08-05 during the 2008 bidding, it could not ink any PSC with the firm because of disputes with India.
This is, however, the second incident that ConocoPhillips backtracked from Bangladesh's offshore operations due to non-viable prospects.
The US firm in April backed out from signing PSC for oil and gas exploration in shallow water block SS-07 after being selected finally by the government for inking a PSC.
It then stated that the block, located offshore Bangladesh, was no longer competitive in the company's portfolio, and hence notified Petrobangla that it cannot sign the PSC under the current terms.
ConocoPhillips in June sought upward revision of fiscal terms in the PSCs for these two DW blocks. The firm then held talks with State Minister for Power, Energy and Mineral Resources Nasrul Hamid, expressing its plea.
It was seeking 2.0 per cent hike in natural gas tariff annually and raise the tariff to a level similar to that of neighbouring Myanmar.
ConocoPhillips also wanted that like Myanmar, Bangladesh would build sub-sea natural gas pipeline to carry natural gas, to be produced in two DW blocks, from deep-sea to shore.
Separately, the US firm is eyeing to have PSC inked with Petrobangla for three new DW blocks - DS-12, DS-16 and DS-21 - that were offered during the 2012 offshore bidding round with higher incentive.
ConocoPhillips together with Norway's Statoil submitted bids for all the three blocks and has already become responsive in Petrobangla's evaluation for inking PSC.

azizjst@yahoo.com