Three IOCs finally bid for offshore blocks

Dhaka,  Wed,  26 October 2016
Published : 20 Oct 2016, 00:56:13

Three IOCs finally bid for offshore blocks

Petroleum exploration in Bay
Three IOCs finally bid for offshore blocks
M Azizur Rahman

Three international oil companies (IOC), one each from Norway, South Korea and Singapore, have finally submitted bids for exploring hydrocarbons in as many offshore blocks in the Bay of Bengal, said officials.

As the deadline was over Wednesday for bid submission for the much-awaited exploration of oil and gas reserves in the country's offshore areas, Norwegian Statoil, South Korean Daewoo and Singapore's KrisEnergy were found in the queue.

All the three IOCs have submitted expressions of interests (EOIs) to carry out hydrocarbon exploration in deepwater blocks DS-10 and DS-11 and shallow block SS-10 at the close of bid-submission deadline Wednesday, Petrobangla Chairman Istiaque Ahmad told the FE.

"We shall evaluate the EoIs and short-list those deemed best suited," he said.

Request for proposal (RfP) will be sent to the short-listed companies thereafter, for submission of final bids, Mr Ahmad said.

The state-run Bangladesh Oil, Gas & Mineral Corporation or Petrobangla had invited EOIs from the interested IOCs on September 28 to contract out the blocks.

"Petrobangla avoided the usual norms of finalizing a model production-sharing contract before launching this bidding round," he said.

Instead, the contract terms will be fixed on the basis of the bids received, following negotiations.

"We changed the bid criteria to lure IOCs," he added.

The size of DS-10 and DS-11 and SS-10 are of 3,381 square kilometres (sq km), 3,693 sq kms and 4,696 sq kms respectively.

Under the bid terms, contractor will bear all the cost. Recovery of the cost is subject to the discovery of hydrocarbon, Ahmad said. The two deepwater blocks were awarded before to US firm ConocoPhillips following 2008 bidding round, which on June 16, 2011 inked production-sharing agreements on both blocks DS-08-10 and DS-08-11.

It later walked away from both the blocks in December 2014 after investing around $20 million in 2D seismic surveys, saying they were unviable. It had earlier sought an upward revision of the fiscal terms, and Bangladesh said it was not in a position to make any change.

Shallow-water block SS-10 was offered in 2012 and 2013 bidding rounds but it failed to attract a bidder.

Among the IOCs that submitted EOIs, only KrisEnergy is currently involved in oil-and-gas exploration in Bangladesh.

KrisEnergy is the operator for onshore Block 9 of 1,770 sq kms in size and located some 100 kms off the capital, having the working interests of 30 per cent.

Bangora gas field in Block 9 is currently supplying around 95 million cubic feet per day (mmcfd) of natural gas, according to Petrobangla data as on October 18.

The Singapore-based firm has also 45 per cent working interests in a shallow seawater block-SS-11. It has an area of 4,475 sq kms. KrisEnergy along with its joint-venture-partner Australian Santos (45 per cent stake) has already completed 2D survey and plans to carry out 3D survey soon.

Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) has 10 per cent carried-interest stake in SS-11.

Bangladesh is trying to promote exploration in the Bay of Bengal to help meet its mounting energy demands. The country is currently dependent on onshore fields for gas output, with production hovering around 2,700 mmcfd against the demand at more than 3,300 mmcfd.

The shortfall has resulted in the rationing of supply to industries, power plants and fertilizer factories and the suspension of new piped gas connections to commercial and household consumers.

Bangladesh in July awarded final contract to build the country's first liquefied natural gas (LNG) import terminal to US company Excelerate, with a view to starting LNG import by December 2017.
Editor : A.H.M Moazzem Hossain
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