Initial deal signed with US oil giant
Sunday, 10 October 2010
M Azizur Rahman
The US oil giant ConocoPhillips has signed an initial deal with state-owned Petrobangla to conduct oil and gas exploration in deep waters of the Bay of Bengal after two years of protracted negotiations, a top energy official said Saturday.
"We were able to iron out all the thorny issues and subsequently signed the preliminary deal," Petrobangla chairman Dr Hossain Monsur said.
"Now, it's a matter of time to sign the production sharing contract," he told the FE.
The ConcoPhillips is expected to begin seismic survey and hydrocarbon exploration in the country's offshore blocks after signing the PSC, he said.
Experts said the US energy group's entry to the long-awaited exploration is significant as Bangladesh seeks to ensure its energy security.
The initial signing comes at a time when the country is reeling under acute gas crisis with the overall production hovering around 1980 million cubic feet per day (mmcfd) against the demand of more than 2400 mmcfd.
The country requires additional gas to run its industrial units that have kept its economy humming.
But the gas shortage forced the government to shut down several fertiliser factories, suspended operation of compressed natural gas (CNG) filling stations for six hours a day and introduced holiday staggering in industries.
Petrobangla officials said ConocoPhillips were selected for two deep water gas blocks -- DS-08-10 and DS-08-11 blocks in 2008 offshore bidding - although it became the lowest bidder for eight offshore blocks.
In its bids the ConocoPhillips pledged to invest $110.66 million and offered a bank guarantee of the same amount for the two blocks it got approval.
But signing of the PSCs remained stalled over two years due to overlapping dispute with neighbors as Myanmar and India have claimed part ownership over the three offshore blocks awarded to ConocoPhillips and Tullow Oil.
Bangladesh is now in talks with its neighbors to settle the maritime boundary disputes for kicking off explorations in the prospective offshore structures.
It has also lodged suit with the United Nations tribunal to settle the maritime boundary disputes with neighbors.
Bangladesh's foreign ministry is also working to demarcate the disputed areas in the ConocoPhillips and Tullow awarded blocks for immediate start of exploration works there.
At present UK's Cairn Energy operated Sangu gas field is the country's only functioning offshore field with the output hovering around 24 million cubic feet per day (mmcfd).
International oil companies were awarded only 12 hydrocarbon blocks -- both onshore and offshore -- since gas exploration began in the country in late 1960s. But they now hold only six blocks having given up the rest.
The US oil giant ConocoPhillips has signed an initial deal with state-owned Petrobangla to conduct oil and gas exploration in deep waters of the Bay of Bengal after two years of protracted negotiations, a top energy official said Saturday.
"We were able to iron out all the thorny issues and subsequently signed the preliminary deal," Petrobangla chairman Dr Hossain Monsur said.
"Now, it's a matter of time to sign the production sharing contract," he told the FE.
The ConcoPhillips is expected to begin seismic survey and hydrocarbon exploration in the country's offshore blocks after signing the PSC, he said.
Experts said the US energy group's entry to the long-awaited exploration is significant as Bangladesh seeks to ensure its energy security.
The initial signing comes at a time when the country is reeling under acute gas crisis with the overall production hovering around 1980 million cubic feet per day (mmcfd) against the demand of more than 2400 mmcfd.
The country requires additional gas to run its industrial units that have kept its economy humming.
But the gas shortage forced the government to shut down several fertiliser factories, suspended operation of compressed natural gas (CNG) filling stations for six hours a day and introduced holiday staggering in industries.
Petrobangla officials said ConocoPhillips were selected for two deep water gas blocks -- DS-08-10 and DS-08-11 blocks in 2008 offshore bidding - although it became the lowest bidder for eight offshore blocks.
In its bids the ConocoPhillips pledged to invest $110.66 million and offered a bank guarantee of the same amount for the two blocks it got approval.
But signing of the PSCs remained stalled over two years due to overlapping dispute with neighbors as Myanmar and India have claimed part ownership over the three offshore blocks awarded to ConocoPhillips and Tullow Oil.
Bangladesh is now in talks with its neighbors to settle the maritime boundary disputes for kicking off explorations in the prospective offshore structures.
It has also lodged suit with the United Nations tribunal to settle the maritime boundary disputes with neighbors.
Bangladesh's foreign ministry is also working to demarcate the disputed areas in the ConocoPhillips and Tullow awarded blocks for immediate start of exploration works there.
At present UK's Cairn Energy operated Sangu gas field is the country's only functioning offshore field with the output hovering around 24 million cubic feet per day (mmcfd).
International oil companies were awarded only 12 hydrocarbon blocks -- both onshore and offshore -- since gas exploration began in the country in late 1960s. But they now hold only six blocks having given up the rest.