US oil and gas giant is now interested to get three new deep water blocks in the Bay of Bengal where fiscal terms are better than two blocks it left out, a company insider said Tuesday.
"We look forward to get blocks -- DS-12, DS-16, and DS-21 - and start exploration in these blocks with our partner Statoil as soon as possible," Managing Director of ConocoPhillips Bangladesh Tom Early told the FE.
"We are in continuous contact and discussions with the government. We wish to emphasise that our decision on blocks 10 & 11 is based on the technical and commercial merits of the blocks and PSC terms only and does not reflect any change in ConocoPhillips' interest in continued investment in exploration in Bangladesh and in the development of any commercial discovery that may be made," Early added.
ConocoPhillips decided Monday to cease operations at two deepwater blocks -- DS-08-10 and DS-08-11 -- off Bangladesh in the Bay of Bengal for what it said the prospects there were non-viable.
The government in 2012 had revised fiscal terms in the model production sharing contract (PSC) for the three deep water blocks to make the bidding attractive to international oil companies (IOCs).
ConocoPhillips along with its Norwegian energy firm Statoil submitted bids in January 2014, under a joint venture (JV) for hydrocarbon exploration in all the three deep water blocks put on offer.
State-owned Petrobangla has already evaluated all the three bids from the JV, which were single bid for each of the blocks, and reported them as responsive for awarding all the three blocks, said a senior Petrobangla official.
Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources (MPEMR), is now scrutinising the Petrobangla's evaluation.
If approved, the JV of the ConocoPhillips and Statoil will be invited to ink PSCs for the blocks, said the Petrobangla official on the day.
The revisions included significant fiscal and commercial improvements from the previous 2008 PSC , such as higher price for the gas, annual price hikes, enhanced annual cost recovery limits, tax waiver for contractors for the entire life of the project, no transmission tariff and scope to sell the gas to a third party within the country.
The price of gas from the new deep water blocks has been pegged to high sulfur fuel oil (HSFO) prices and the floor price for HSFO has been fixed at US$100 per tonne and the ceiling price at $200 per tonne.
The price is calculated at around $6.5 per Mcf (1,000 cubic feet).
The gas price will be 130 per cent of HSFO price ex-Singapore with biddable discounts.
The JV has committed to invest a total of US$327 million to explore three new deep water blocks during the exploration which will be a total of eight years with a five-year initial exploration period and a three-year subsequent exploration period.
It has proposed to provide bank guarantee of the same amount against its committed investments and work programmes.
In its proposal, the JV of the US and Norwegian firm also pledged to carry out a 3,412 line-kilometre two dimensional seismic survey in block DS-12, 2,775 line-kilometre survey in DS-16 and 3,376 line-kilometre survey in block DS-21.
The price of gas from the two deep water blocks, that ConocoPhillips decided to surrender Monday, was linked 100 per cent to HSFO prices, with the floor price set at $70 per tonne and ceiling at $180 per tonne.
The price is worked out at around $4.5 per Mcf.
There were no provision of annual hike of hydrocarbon prices, and no exemption from paying a wheeling charge to the Petrobangla to transport natural gas to end-users for the blocks ConocoPhillips left out.
ConocoPhillips had to pay corporate tax worth 37.5 per cent annually, if it continued operations.
azizjst@yahoo.com