Present govt unlikely to sign PSCs for exploring gas

M Azizur Rahman
The incumbent government is unlikely to sign production-sharing contracts (PSCs) for hydrocarbon explorations in new offshore gas blocks during its tenure as the cabinet committee Sunday returned the energy ministry's proposal for further legal clarifications, officials said.
"The cabinet committee has put up some technical observations over signing of the PSCs and sought clarifications from the law ministry," energy secretary Mohammad Mohsin told the FE about the outcome of Sunday's meeting.
He said clarifications over these observations would be prepared as soon as possible.
Another senior energy ministry official said that the cabinet instruction for further scrutiny at a time when the general elections are only one and a half months away indicates towards the issue being sidelined by the government.
The cabinet committee on government purchase in September last sent back the similar proposal of the energy ministry over the signing of PSCs for offshore hydrocarbon exploration saying it was not within its jurisdiction to evaluate it.
The latest observation from the cabinet will, however, be a big blow to the country's future energy security as it is already struggling to provide required energy supplies to the consumers, industrialists said.
Currently the country's total gas production is around 1780 million cubic feet per day (mmcfd) against the demand for about 2,000 mmcfd.
They said scores of industries including power plants and fertliser factories are being compelled to cut their productions due to gas crisis.
The energy ministry in its latest proposal to the cabinet recommended two IOCs as responsive for nine offshore gas blocks and proposed for signing of PSCs with them to initiate oil and gas exploration.
The bid evaluation committee earlier selected two bidders - the US- based ConocoPhilips and Irish Tullow - as responsive for nine blocks and sent it to the energy ministry for approval.
The bid winning companies have pledged to invest a total of US$492.52 million to conduct oil and gas exploration in nine offshore blocks in the Bay.
He said among the nine blocks as selected for awarding, eight are in deep water and one in the shallow depth of Bay of Bengal.
The US- based ConocoPhilips came out as the most successful bidder as it won all the eight deep-water blocks it submitted for, while Irish Tullow also bagged the lone shallow water gas block it competed for.
In its bid the US oil company ConocoPhillips offered to invest $442.67 million, which would be provided in the form of a bank guarantee, against four proposed PSCs for eight offshore gas blocks.
Tullow Bangladesh Ltd committed to invest $49.85 million in one shallow water block and offered bank guarantee worth $33.9 million against their exploration works.
The bid evaluation committee, during their scrutiny after the close of the offshore bidding on May 7, 2008, found bids of seven IOCs including those of Australian major Santos International, Chinese CNOOC and US-China joint venture Longwoods Resources Ltd, Korea National Oil Corporation of South Korea and Comtrack Services Ltd of UK as non-responsive.
These IOCs have submitted either unacceptable profit-sharing offers or lacked other necessary qualifications as mentioned in the model production-sharing contract (MPSC), a senior Petrobangla official said.
Bangladesh in mid-February 2008 offered a total of 28 blocks for oil and gas exploration of which 20 were located in the deep-sea and eight in shallow-depth.
Seven IOCs submitted bids for 15 offshore gas blocks in the latest offshore bidding round that closed on May 7 last.