The government yesterday awarded two shallow water blocks in the Bay of Bengal to Indian state-run oil company ONGC Videsh to explore gas and oil, in efforts to overcome energy shortages.
This is the first time that an Indian company has got any sea block in Bangladesh for exploring hydrocarbon resources.
Under the deal signed yesterday, the Indian company will explore the offshore blocks -- SS-04 and SS-09 -- with an investment of $144.8 million in partnership with Bapex and Oil India.
Block SS-04 covers an area of 7,269 square kilometres and block SS-09 an area of 7,026 square kilometres.
Until the recovery of its investment, the ONGC will get 55 percent of the explored resources and the rest will be shared between Petrobangla and ONGC.
Petrobangla will get between 70 and 90 percent of the oil and condensate and between 60 and 85 percent of the gas.
On the option of sale, the offer must be made to the Petrobangla first. If it does not accept the offer within six months, the contractor will be able to find buyers to sell its shares within Bangladesh.
Speaking at the agreement signing ceremony in the capital, Finance Minister AMA Muhith said Bangladesh would now get more gas to meet its growing energy need.
ONGC Videsh Managing Director DK Sarraf said, "I am really excited. Now we will make plans to start exploration and production as soon as possible."
He said their next job would be to open an office in Bangladesh. He, however, did not give any timeline.
Sarraf also said the ONGC Videsh partnered with the Oil India, which has equal stake in the venture, as the latter has vast experience of exploring hydrocarbon resources in northeastern India -- a region which has similar hydrocarbon structures as in the two blocks.
Indian High Commissioner in Dhaka Pankaj Saran described the signing of the agreement as a special occasion in the relations between the two countries.
"Energy is going to be a major challenge for the region as well as the rest of the world. So, it is very appropriate to enter into such partnerships," he added.
The diplomat hoped the ONGC would start work immediately and provide the kind of service that satisfied the needs of Bangladesh.
Bangladesh now produces 2,300 million cubic feet of gas a day against the demand of 2,700 mmcfd from 2.5 million customers. The demand is growing by about 10 percent a year.
"The future is uncertain if we don't start exploring hydrocarbon resources in the Bay now," said Energy Adviser Tawfiq-E-Elahi Chowdhury.
"But we will also have to keep in mind that gas and oil might not be available after five years. But we have to take steps right now," he added.
The ONGC has undertaken an aggressive programme for Bangladesh, he said, adding, "I would like to request them to follow an aggressive schedule too."
The adviser also touched upon the issue of maritime boundary dispute with India. "Once we settle the dispute we will be able to explore more resources in the Bay."
ONGC Videsh owns participating interests in 32 oil and gas assets in 16 countries and contributes to 12 percent and 7 percent of oil and natural gas production of India.
Petrobangla will award two more blocks to two international oil companies in the coming weeks, said Muhammad Imaduddin, a director of Petrobangla.
Khadiza Nazneen, senior assistant secretary of the energy ministry, AJ Duggal, a general manager of ONGC Videsh, Imam Hussain, company secretary of Petrobangla, NR Hazarika, head of geo-science and business development of Oil India and Abdus Sabur, general manager of Bangladesh Petroleum Exploration and Production Company Ltd, signed yesterday's deal.
Nasrul Hamid, state minister for power and energy, Mozammel Haque Khan, energy secretary and Prof Hossain Mansur, chairman of Petrobangla, also spoke on the occasion.