Anisul Islam Noor :
Petrobangla has invited ‘Expression of Interest’ (EoI) from International Oil Companies (IOCs) to explore and develop gas fields in three deep-sea blocks in the Bay of Bengal.
The decision has been taken since the previous attempt to award these blocks through competitive bidding failed. The EoI submission deadline on February 25.
The blocks are – DS-12, DS-16 and DS-21, located at depths ranging from 20-200 metres having the size of 3,560 square kilometers (sq-km), 3,353 sq-km and 3,204 sq-km respectively, said, Ishtiaque Ahmad Chairman of Petrobangla.
In previous bidding rounds, Petrobangla would have fixed hydrocarbon prices in model production sharing contract (PSC) before launching of the bids and lured by prospective terms and prices interested IOCs took part in the bidding.
Drastic fall in oil prices in international market as well as the previous ‘unattractive’ model PSC for deep-water blocks prompted the government to change the hydrocarbon block awarding process, a competent source in Energy Sector said.
Unlike the usual bidding rounds, the government would purchase hydrocarbon (HC) now at a competitive price, to be quoted by the international oil companies (IOCs) in bids, Petrobangla Chairman said.
Under the new system, the contractor will bear all the cost. Recovery of the cost is subject to discovery of petroleum.
The purpose of inviting the EoI is short-listing of the IOCs, interested in oil and gas exploration as well as developing gas fields in these three deep-sea blocks.
The interested IOCs, which appear best suited to perform the operation, will be short-listed. Request for proposal will be sent to the short-listed companies thereafter.
The eligible IOCs might be individual or of joint venture. But at least one member must hold an offshore acreage as operator with gas daily production of at least 15,000 barrel of oil or 150 million cubic feet (mmcfd) for being considered as technically qualified for the short listing.
Officials said these three blocks were put on offer by Petrobangla during the country’s 2012 bidding round.
Petrobangla subsequently had awarded the blocks to a joint venture (JV) of Norwegian Statoil and the US-based ConocoPhillips for hydrocarbon exploration. ConocoPhillips and Statoil had 50:50 stakes in the JV.
Despite being awarded, ConocoPhillips backed out from signing PSCs in April 2015, showing ‘poor fiscal terms’.
Following ConocoPhillips’ retreat, Statoil was interested to explore these deep-water blocks alone, subject to getting ‘increased fiscal benefits’ in the PSC.
Statoil sought price rise of hydrocarbon in line with the annual rate of inflation, in addition to the provision of 2.0 per cent annual hike in prices from first gas production, which was provided in the model PSC, said a Petrobangla official.
Besides, the Norwegian firm wanted the Petrobangla would bear the cost of laying pipeline from deep-water gas-field to shore. As per the model PSC, the pipeline construction cost was to be borne by contractor.
After discussing with Statoil, Petrobangla had sent a proposal to the Energy and Mineral Resources Division for a decision.
But the Ministry rejected it, which prompted Petrobangla to invite EoI for these blocks afresh.
The country is trying to develop resources in the Bay of Bengal to help meet the country’s mounting energy demand. It is currently dependent on onshore fields for its entire natural gas output.
At present gas production is running at around 2700 mmcf per day against the demand for above 3200 mmcf according to Petrobangla statistics.
Short supply of natural gas has pushed the government to ration supplies to industries, power plants and fertilizer factories.
