M Azizur Rahman

The government will refrain from launching fresh international bidding to explore gas in the Bay of Bengal until it resolves festering maritime territory row with India and Myanmar, officials said Thursday.

The two neighbours have said majority of Bangladesh's offshore gas and oil blocks overlaps their sea territory and have demanded that Dhaka put on hold leasing out these highly potential Bay stretches to foreign firms.

"We are not going to launch any fresh offshore bidding round until we settle the dispute over our maritime boundary," Petrobangla chairman M Muqtadir Ali told the FE.

The authorities had received poor response in its first offshore bidding for energy blocks in February 2008 after protests from emerging Asian superpower India and military junta-led Myanmar have kept many companies at bay.

In the bidding, international oil companies have shown interest for only 15 offshore blocks, with nine of them having single bidder, against a total 28 blocks on offer.

Ali said the poor response was due to the row over ownership of the maritime blocks. "Foreign firms will be interested to explore oil and gas in our sea territory only when they are sure that the areas don't have any disputes."

Petrobangla also took as long as 18 months until August 2009 for selecting bid winners for three offshore blocks, as objections by India and Myanmar prompted the authorities to seek advice from legal experts and the foreign ministry.

Claims by the neighbours that the three blocks overlapped their territories have also cast a shadow over the government's negotiations with the two companies that won the bids --- US ConocoPhillips and Irish

Tullow.

"We have asked both ConocoPhillips and Tullow to avoid the disputed waters during exploration activities. We don't want any confrontation with our neighbours," Mr. Ali said.

Last week the government said it would take both the neighbours to a United Nations tribunal to settle the maritime boundary row to ensure its "sovereign rights over the natural resources in the Bay".

The country has appointed top global law firm Foley Hoag LLP for the UN arbitration. Foreign ministry officials have said the arbitration may take four to five years.

Bangladesh urgently needs new energy sources --- mainly in the Bay --- as government forecasts indicate its current gas reserves will run out by 2014-2015 at current consumption rates.

The country's overall gas output is limited only to onshore productions, which account for more than 98 per cent, or 1940 million cubic feet (mmcf) of gas, of daily supply. The lone Sangu offshore gas field produces 38 mmcf a day.