Anisul Islam Noor :
The US energy company ConocoPhillips has requested the government to increase the gas price. It says that the exploration cost is high in the deep sea. But the government has turned down the proposal, saying that amending the PSC midway will set up a bad precedence.
The company claims there is about five to seven trillion cubic feet of gas in deep sea block Nos 10 and 11. It has reached such conclusion as based on the two-dimensional seismic surveys conducted in the blocks. The company says that the PSC needs to be amended and the price of gas should be increased, as the lifting of gas from these blocks will involve high costs.
The government, however, has decided not to increase the price of gas. Petrobangla Chairman Professor Hossain Mansur said, “It is not possible to determine the gas reserve in any particular site through two-dimensional seismic survey only.”
Drilling exploratory wells can do the work. “The Petrobangla chairman says that ConocoPhillips did not conduct the two-dimensional seismic survey in detail. What they did was a kind of geological monitoring, called ‘reconnaissance’ in scientific terms.
According to Petrobangla and Energy Ministry sources, ConocoPhillips had wanted state run BAPEX as a joint partner in the post-exploration operations of the two blocks. An investment of 35 million US dollars was needed for this. As BAPEX has a 10 percent interest in every PSC with foreign companies for offshore oil and gas exploration, the government did not respond to this proposal.
ConocoPhillips also approached the Energy Ministry and other levels of the government regarding about their proposal to increase the price of gas.
Members of the Foreign Investors Chamber of Commerce and Industry (FICCI), the apex body of foreign companies in Bangladesh, have also met the State Minister for Energy on the issue suggesting increase of gas price. They point out that the price of gas is higher in India and Myanmar than in Bangladesh.
Certain quarters within the government feel the PSC should be amended to increase the price of gas; otherwise ConocoPhillips will leave without exploring the blocks. They argue that a fresh bidding process and to draw up a new PSC will take at least two years.
But the responsible officials of the government said that amending the PSC midway would set a bad precedence. Other foreign companies would make similar claims.
ConocoPhillips had also seen the price of gas quoted in the PSC when it came to work here, though it had not fulfilled all the provisions incorporated in the PSC, such as conducting 3D seismic survey and drilling exploratory wells. If they leave without completing these provisions, their performance guarantee deposit could be forfeited.
State Minister for Power and Energy Nasrul Hamid said that the PSC would not be amended to increase the cost of gas in keeping with ConocoPhillips’ demands.
ConocoPhillips Managing Director in Bangladesh Thomas J Earley said on Saturday that they wanted to work with the Bangladesh government. They had informed the government of the limitations of the PSC concerning blocks 10 and 11.
The financial clauses in the PSC were not commercially viable for offshore deep-sea exploration. He said, the government would have to realise this to make necessary adjustments.
