Govt offers 85pc area to ConocoPhillips
Sunday, 8 May 2011
M Azizur Rahman
The government has offered a reduced area from two offshore gas blocks the US oil giant ConocoPhillips has won for exploration, as the neighbours have opposed awarding the entire blocks, officials said. "We are expecting to ink a deal with the US firm to initiate exploration in 85 per cent area of the two offshore gas blocks in the Bay of Bengal," a senior energy ministry official told the FE Saturday. The remaining 15 per cent area will be kept 'unexplored' from the total block area as the government believes it lies in the disputed area as claimed by the neighbouring India and Myanmar. ConocoPhillips has already agreed to sign a production sharing contract (PSC) with state-owned Petrobangla to initiate exploration in two deep water offshore blocks - DS-08-10 and DS-08-11 - in the reduced block area, said the official. The US firm also asserted that a side letter agreement will be required to be signed to ensure that ConocoPhillips will have rights for exploration in the remaining area once the dispute over the maritime boundary with the neighbouring countries is over. The law ministry has already vetted signing of the PSC with the US firm for exploration in 85 per cent of the total block area. Energy ministry has recently sent a proposal to the Economic Affairs Committee for getting the final nod from the government high-ups before signing the much-delayed PSC with ConocoPhillips. "I hope the PSC with ConocoCpillips will be signed shortly," Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury told the FE. Officials said although belated, the signing of PSC with ConocoPhillips is extremely necessary to augment gas production and ensure the country's future energy security. The country will be benefited as soon as the US firm initiates exploration activities in two gas blocks in the Bay of Bengal. The overall gas production across the country is hovering around 1,980 million cubic feet per day (mmcfd) against the demand for over 2,500 mmcfd. The acute gas crisis has forced Petrobangla to suspend gas supplies to new industries. Operation of several gas-guzzling fertiliser factories have remained suspended to divert gas to power plants. ConocoPhillips won exploration rights for two offshore gas blocks during the country's 2008 bidding round although it was primarily selected for eight offshore blocks. The Economic Affairs Committee decided to offer two offshore blocks to the US firm as it pledged to invest US$ 110.66 million and offered bank guarantee for the same amount. ConocoPhillips has committed to conducting 2D seismic survey covering 1,200 kilometres line during its initial five years of exploration period with an investment commitment of $ 2.496 million offering bank guarantee for the same amount. It has committed to conducting 3D seismic survey in 500 square kilometres and drilling a well during the first extension period of two years investing $ 58.1665 million and offering bank guarantee for the same amount. The company has also pledged to drill one well in its second extension period of two years with an investment commitment of $ 50 million. But signing of the PSC remained stalled over the past two years mainly due to overlapping dispute with neighbours as Myanmar and India claimed part ownership over the offshore blocks awarded to ConocoPhillips. The government has lodged a suit with the United Nations tribunal to settle the maritime boundary disputes with the neighbours. It is also now in talks with the neighbours to settle the maritime boundary disputes for kicking off explorations in the prospective offshore structures.
The government has offered a reduced area from two offshore gas blocks the US oil giant ConocoPhillips has won for exploration, as the neighbours have opposed awarding the entire blocks, officials said. "We are expecting to ink a deal with the US firm to initiate exploration in 85 per cent area of the two offshore gas blocks in the Bay of Bengal," a senior energy ministry official told the FE Saturday. The remaining 15 per cent area will be kept 'unexplored' from the total block area as the government believes it lies in the disputed area as claimed by the neighbouring India and Myanmar. ConocoPhillips has already agreed to sign a production sharing contract (PSC) with state-owned Petrobangla to initiate exploration in two deep water offshore blocks - DS-08-10 and DS-08-11 - in the reduced block area, said the official. The US firm also asserted that a side letter agreement will be required to be signed to ensure that ConocoPhillips will have rights for exploration in the remaining area once the dispute over the maritime boundary with the neighbouring countries is over. The law ministry has already vetted signing of the PSC with the US firm for exploration in 85 per cent of the total block area. Energy ministry has recently sent a proposal to the Economic Affairs Committee for getting the final nod from the government high-ups before signing the much-delayed PSC with ConocoPhillips. "I hope the PSC with ConocoCpillips will be signed shortly," Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury told the FE. Officials said although belated, the signing of PSC with ConocoPhillips is extremely necessary to augment gas production and ensure the country's future energy security. The country will be benefited as soon as the US firm initiates exploration activities in two gas blocks in the Bay of Bengal. The overall gas production across the country is hovering around 1,980 million cubic feet per day (mmcfd) against the demand for over 2,500 mmcfd. The acute gas crisis has forced Petrobangla to suspend gas supplies to new industries. Operation of several gas-guzzling fertiliser factories have remained suspended to divert gas to power plants. ConocoPhillips won exploration rights for two offshore gas blocks during the country's 2008 bidding round although it was primarily selected for eight offshore blocks. The Economic Affairs Committee decided to offer two offshore blocks to the US firm as it pledged to invest US$ 110.66 million and offered bank guarantee for the same amount. ConocoPhillips has committed to conducting 2D seismic survey covering 1,200 kilometres line during its initial five years of exploration period with an investment commitment of $ 2.496 million offering bank guarantee for the same amount. It has committed to conducting 3D seismic survey in 500 square kilometres and drilling a well during the first extension period of two years investing $ 58.1665 million and offering bank guarantee for the same amount. The company has also pledged to drill one well in its second extension period of two years with an investment commitment of $ 50 million. But signing of the PSC remained stalled over the past two years mainly due to overlapping dispute with neighbours as Myanmar and India claimed part ownership over the offshore blocks awarded to ConocoPhillips. The government has lodged a suit with the United Nations tribunal to settle the maritime boundary disputes with the neighbours. It is also now in talks with the neighbours to settle the maritime boundary disputes for kicking off explorations in the prospective offshore structures.