Petrobangla finds single bids for 3 deepwater HC blocks \\\'acceptable\\\'

The state-owned Petrobangla has found all the three bids submitted by the consortium of US major ConocoPhillips and Norwegian energy firm Statoil responsive for awarding three deep water hydrocarbon (HC) blocks in the Bay of Bengal, a senior official said.
"We have evaluated all the three bids of the consortium and found those acceptable," Petrobangla Chairman Hussain Monsur told the FE Saturday.
Petrobangla has forwarded the evaluation report to the Energy Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) for approval, he said.
"It is the MPEMR to decide on how many blocks will be awarded to the joint venture (JV) of the US and Norwegian firms" said Mr Monsur.
The JV of ConocoPhillips and Statoil was the single bidder for all three deep water blocks for oil and gas exploration.
The JV has committed to invest a total of US$327 million to explore three deep water blocks-DS-12; DS-16 and DS-21 during the period for exploration, which will be a total of eight years with a five-year initial exploration period and a three-year subsequent exploration period.
The JV has proposed to provide bank guarantee equivalent to the amount it has committed to invest.
In its proposal the JV has also pledged to carry out a 3,412 line-kilometer two dimensional seismic survey in block DS-12, 2,775 line-kilometer in DS-16 and 3,376 line-kilometer in block DS-21.
Water depth of the deepwater blocks range from 200- 2000 meters, Monsur said.
It has committed to drill a total of six wells in three deepwater blocks with two wells in each of the block.
The contractor will be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field.
Petrobangla re-invited bids from international oil companies for these three deep sea blocks in October 2013 under revised terms and conditions with significant fiscal and commercial improvements.
Under the new model production sharing contracts (MPSC), for deep water blocks, the prices of wellhead oil and gas would increase by at least 2.0 per cent annually with the start of commercial production.
Wellhead gas prices in Bangladesh are pegged to high sulfur fuel oil prices in the international market, while oil prices are determined on a "fair market value" basis as agreed by the contractors and the state-owned Petrobangla.
Gas price, under the new MPSC, has been pegged to high sulfur fuel oil prices (HSFO) and the floor price for HSFO has been fixed at US$ 100 per tonne and the ceiling price at $200 per tonne.
The gas price for these three deepwater blocks will be 130 per cent of HSFO price ex Singapore with biddable discounts, he said.
It works out the price at around $6.5 per Mcf (1,000 cubic feet).
The JV, if selected, would be exempted from paying a wheeling charge to the Petrobangla to transport natural gas to end-users within the country.
Currently, the wheeling charge is 4.0 per cent, which is applicable to the operating IOCs.
It would also enjoy the right to repatriate the profit in full, no signature bonus or royalty, no duty for equipment and machinery imported for petroleum operations during exploration, production and development.
The JV would also have the option to sell 50 per cent of contractor's share of natural gas to a third party in the domestic market, at a negotiated price, without Petrobangla's right of first refusal.
The contractor will, however, not be able to export gas, in any form, from these three deepwater blocks.
The three deepwater blocks were offered for hydrocarbon exploration along with nine shallow-water blocks during the December 2012 licensing round.
Petrobangla then suspended bidding on the three deepwater blocks to review the MPSC terms and to make it competitive with the PSC terms of neighbouring South Asian countries as some IOCs pointed out that the then PSC terms were not enough to bid.
The Petrobangla received bids for only three of the nine shallow-water blocks in the licensing round which ended on April 2 last, on extension of the initial bid submission deadline of March 18.
Later, it again offered the six shallow water blocks under the original terms and received just one bid.
Bangladesh in its over 43 year's history only awarded two deep sea blocks in the Bay of Bengal for exploration by the IOCs.
These two deep water blocks-DS-08-10 and DS-08-11 were awarded to US's ConocoPhillips on June 16, 2012 under the PSC terms of 2008 bidding round.