The state-run Petrobangla on Wednesday initialed a production sharing contract with Thailand-based Posco Daewoo Corporation for oil and gas exploration in the deep sea block- 12.
Ptrobangla director Md Mahbub Sarwar and Daewoo’s new venture exploration manager Junggoo Junn signed the contract document on behalf of their respective sides.
Before signing the final production sharing contract, it would require approval of the cabinet committee on purchase after obtaining vetting from the law ministry, Petrobangla chairman Istiaque Ahmad told New Age after the draft was initialed.
Petrobangla expects that Daewoo would start two dimensional seismic surveys in the middle of 2017 and the potentials for oil and gas would be assessed towards the end of 2018, said officials.
On October 9, the government awarded the contract to Daewoo under the Speedy Supply of Power and Energy (Special Provisions) Act 2010 after a bidding process was postponed as the lone bidder, Norwegian Statoil, demanded commercial benefits beyond the bid it submitted under the Model Production Sharing Contract-2012.
Daewoo agreed to conduct 1,800 line kilometer two dimensional seismic surveys in the first two years of a five-year initial contract period for exploration activities, Petrobangla officials said.
They said that Daewoo would also carry out a 1,000 square kilometers three dimensional seismic survey on the third year of the initial exploration period. The company would drill the first exploration well on fourth or fifth year.
Among other financial facilities, Petrobangla also took the responsibility of paying taxes on behalf of the companies under the amended PSC-2012.
Daewoo will be paid US$ 6.50 for each thousand cubic feet of natural gas it will own under the production sharing contract, initialed on Wednesday, the officials said.
Daewoo would be allowed to sell natural gas and other petroleum resources to a third party in the country or outside the country at negotiated prices if Petrobangla refuges to buy the produces, according to the PSC.
The company also agreed with the other terms and conditions set out in the Model Production Sharing Contract-2012 although it did not participate in the bidding process, they said.
Daewoo, however, became interested about the block after it discovered a gas field in Myanmar’s territory in the Bay which is beside Bangladesh’s deep sea block-12.
In February, Daewoo and its Australian partner Woodside Energy announced the discovery of the gas field in Myanmar’s block AD-7.
The hydrocarbon block-12 was freed along with two other blocks — 16 and 21 — last year, as Norwegian company Statoil claimed additional commercial benefits beyond the bid it submitted under Model Production Sharing Contract- 2012.
Statoil, in a joint-venture with the US oil company ConocoPhillips, was the lone bidder for the three deep sea blocks. Later, Conoco pulled off its interests from the venture.
On February 4, state-run Petrobangla invited international oil companies to submit expression of interests to explore three deep sea blocks- 12, 16 and 21 in the Bay of Bengal.
Daewoo alone submitted its proposal and only for the deep sea block 12.
Under model PSC- 2012, India’s ONGC Videsh is now carrying out seismic surveys in two shallow sea blocks 4 and 9 and a joint venture of KrisEnergy and Santos is carrying out seismic surveys in another shallow sea block 11.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Power & Energy