Govt may sign PSCs with 2 US firms
Oil and gas exploration in the deep sea is likely to begin next winter as the cabinet today may approve signing of the Production Sharing Contracts (PSCs) with two US companies.
The firms -- Statoil and ConocoPhillips -- jointly proposed exploring deep sea blocks 12, 16 and 21 in the off-shore block bidding round floated in 2012.
Though their proposal scored very high in the post-bidding assessment, the Petrobangla took time to complete the evaluation as these were single bids and the government initially wanted to award two blocks instead of three. The government later added the third block to the list, considering the bidders' interest.
The joint venture has proposed to conduct line seismic survey of between 775 and 872 kilometres and drill at least one exploration well during the first five years of the contract. If these conditions are fulfilled, the companies will get into the second phase of the PSCs and develop oil or gas fields, if discovered.
Of the three blocks, 12 and 21 had structural similarity with Myanmar's offshore Shwe gas field that has a proven reserve of 9 trillion cubic feet (tcf).
Chronic gas crisis has become a major impediment to Bangladesh's development in recent years and offshore exploration may be the only hope for finding major gas reserves in future.
ConocoPhillips had previously explored deep sea blocks 10 and 11 under a 2008 PSC and pinpointed a prospected five 5tcf oil and gas reserve in the blocks. But it could not proceed towards drilling as it felt the risk was too high against the financial terms. The company would need at least $3 billion to develop its prospect if gas was found there upon drilling an exploratory well 350km off the coast.
The company then asked the government to revise up its gas price to $9 per thousand cubic feet from $4.5 outlined in the 2008 PSC, which the government turned down. "When they started exploring the blocks, they knew about the terms and conditions. It was not possible for us to change the PSC," Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury notes.
Following this, ConocoPhillips abandoned the exploration last year.
However, signing of the new PSCs with Statoil and ConocoPhillips would bring back exploration activities to the Bay of Bengal from next winter when the sea is calm.
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