05 Apr, 2015 00:00:00 - M Azizur Rahman
A joint venture of a US company and a Norwegian one has got the go-ahead letter for hydrocarbon exploration in three deepwater blocks in the bay but not yet fixed its mind on signing the deal, competent sources said.
The JV of US ConocoPhillips and Norwegian Statoil had a clean sweep in the bidding for search of oil and gas in the Bangladesh territorial waters with an investment plan as per set terms and conditions. The duo has now received the letter of permission from Petrobangla.
"We have received formal notice that we have been awarded the blocks," said ConocoPhillips managing director for Bangladesh operations Tom Early in an email interview given to the FE.
Asked about the JV decision on signing the PSCs, he said, "Any further discussions relating to the PSC will be conducted with the Ministry [energy] and Petrobangla directly."
The state-owned Petrobangla earlier had invited the JV to ink production-sharing contracts (PSCs) with the petroleum corporation and the government of Bangladesh for initiating oil-and-gas exploration as the country strives to ease a looming energy crisis.
The invitation from Petrobangla to the JV came 28 months after the initial bidding for the deepwater blocks.
The deep-sea blocks in the Bay of Bengal are DS-12, DS-16 and DS-21.
With this awarding Bangladesh is now eagerly waiting to ink the deal on output sharing with the JV of ConocoPhillips Asia Pacific New Venture and Statoil ASA.
During the interview, Mr Earley did not say whether or not the joint firm will continue pressing its demand for early implementing of the provision of annual 2.0 per cent hike in natural gas price instead of at first production.
The JV early this past January had sought the provision of annual 2.0 per cent hike in natural gas price beginning earlier than first production for these deepwater blocks.
The US company boss in a previous interview had told the FE: 'We have proposed that escalation of the gas price begin earlier than at first production, which is similar to what is in place in neighbouring countries like Myanmar and Thailand.'
The annual hike in gas prices from maiden gas output was one of the revised provisions made by Petrobangla to lure international oil companies into exploration in three deepwater blocks under the 2012 bidding round.
Other provisions included significant fiscal and commercial improvements from the previous 2008 PSC, such as higher price for the gas, enhanced annual cost-recovery limits, tax waiver for contractors for the entire life of the project, no transmission tariffs and scope to sell the gas to a third party within the country.
The price of gas from the new deepwater blocks has been pegged to high- sulphur fuel-oil prices and the floor price for HSFO fixed at US$100 per tonne and the ceiling price at $200 per tonne.
It works out the price at around $6.5 per Mcf (1,000 cubic feet).
The JV has committed to investing a total of US$327 million to explore the three new deepwater blocks 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.
It has proposed to provide bank guarantee of the same amount against its committed investments and work programmes.
In its proposal the US-Norwegian JV 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.
Once the PSC is inked, it will be second time the ConocoPhillips got involved with oil-and-gas search in the Bay of Bengal in Bangladesh territory.
On the other hand, Statoil will get into Bangladesh's oil-gas exploration with these three deepwater blocks.
mazizur.rahman@outlook.com
