Anisul Islam Noor :
Top international oil companies (IOCs), including Shell, Chevron, and Exxon Mobil, have shown interest in Bangladesh’s oil and gas blocks in the Bay of Bengal after the settled maritime dispute with India.
The country is ready to sweeten the terms of its production sharing contracts (PSCs) in an effort to attract international oil companies after the July 7 verdict by the Permanent Court of Arbitration (PCA) in The Hague, Netherlands, established Bangladesh’s sovereignty over all of the 10 oil and gas blocks at the Bay of Bengal to which India had also laid claim earlier.
State-owned oil and Gas Corporation — Petrobangla — is planning to float international tenders for some of the offshore blocks within this year, as the country’s maritime disputes with India and previously with Myanmar have been resolved. Bangladesh now has a total of 23 offshore blocks — 12 deep-sea blocks and 11 shallow sea blocks — in 118,813-square kilometre area at the Bay of Bengal.
“We would revise the terms and conditions in the
production sharing contract as we would like to call for bids within this year,” Professor Hossain Monsur, chairman of Petrobangla told a group of journalists at his office on Thursday.
Although the details of the new PSCs have not yet been finalized, Monsur indicated that officials are looking into revising the selling price for deep sea gas, IOCs share of revenues and recovery costs as well as first buying right, and corporate tax provisions.
The government would also evaluate the cost for piping gas onshore from the deep-sea blocks, which will be part of the pricing and cost-recovery mechanisms, says Monsur.
Petrobangla is highly supportive of boosting incentives for foreign investment in the upstream sector after twice failing to attract enough bids from the IOCs for its deepwater block offerings under PSC 2008 and PSC 2012. ConocoPhillips Co. secured two deep-sea blocs in June 2011, and the Indian state-owned Oil and Natural Gas Corporation Ltd (ONGC) secured two shallow sea blocs in February this year. In March, Petrobangla signed a deal for another shallow sea block under a joint venture between Australia’s Santos Ltd and Singapore-based KrisEnergy Ltd. Bangladesh’s 2012 Offshore Bidding Round, first offered in December 2012, had attracted interest from 14 companies, including the US’s Chevron Corporation and ExxonMobil, Australia’s Santos, and Norway’s Statoil ASA. Ultimately, only two IOCs — ConocoPhillips of the United States and India’s ONGC — submitted bids for three blocs and signed PSCs.
Neighboring Myanmar, which is believed to have reserves of 50 million barrels of oil and 283.3 billion cubic meters (10 trillion cubic feet) of natural gas, has had greater success attracting IOCs.
Currently, Myanmar sells gas at $9 per thousand cubic feet, whereas Bangladesh’s existing PSC 2012 offers a selling price of only $6.5 per thousand cubic feet with a 2 percent price increment every year.
The IOCs are currently operating in five Bangladeshi offshore blocks at the Bay of Bengal. ConocoPhillips is operating blocks DS 10 and 11, India’s ONGC in blocks SS 04 and SS 09, and Santos-KrisEnergy in block SS 11.
In March 2012, the International Tribunal for the Law of the Sea resolved a maritime dispute between Myanmar and Bangladesh over 283,371 sq km of area. The UN tribunal granted Bangladesh 12 offshore blocks in 111,631 sq km of the disputed waters in the Bay of Bengal.
