It’s been almost 8 years since a foreign company has got the opportunity to export gas to outside Bangladesh, at least in papers. Australian oil company, Santos Bangladesh Limited (SPL) was given the opportunity to export gas if it finds any at the offshore block DS-16, which is about to be explored by Santos and Bapex soon.
The exploration will start once the Sales Purchase Agreement (SPA) between Santos and the state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) gets approval from the Executive Committee of the National Economic Council (ECNEC). Already, the Cabinet Economic Affairs Committee approved the proposal in principle on Wednesday to allow SPA with Australian oil company Santos for offshore gas exploration at Deep Sea Block-16 (DS-16) under a joint venture.
Santos and Bapex are likely to jointly explore the Deep Sea block-16 namely magnama. According to the agreement, if any gas or oil is found there, Santos will have to offer Petrobangla at first to buy the oil or gas. If Petrobangla denies buying then Santos may want to sell it to any third party within this country. Santos will be able to export the oil or gas outside the country if it fails to find any third party within the country.
Energy division related sources informed that, the government is willing to attract foreign investment in this sector. That’s the reason why the government put the option of exporting oil and gas in its policy for any foreign investor. Bangladesh already lacks adequate energy sources to meet its growing demand of energy and there is no reason to let the gas or oil to be exported abroad. Petroangla will buy the gas or oil, the opportunity of export is just a formality, said the sources.
Experts admonished that, all the foreign companies may want to utilize this opportunity from now on. The foreign companies may want to export anyhow if they find enough oil or gas at the offshore blocks to make a quick turnover.
There was an opportunity of exporting oil and gas back in 2008, while the government took the Profit Sharing Contract (PSC) policy for the foreign investors. It was then abolished in 2012 when the government started leasing the sea blocks for another time.
Bapex’s parent organization Petrobangla, the state-run Oil, Gas, and Mineral Resources Corporation have earlier drafted a SPA to conduct the exploration. The SPA draft was sent to the ECNEC meeting on last week for approval and the SPA deal will be finalized once it gets approval from the ECNEC.
Prior to that, SBL submitted a proposal to the Bapex to conduct an exploration at the Deep Sea block-16’s magnama ring-fenced area. According to that proposal, Santos was willing to hand over its 49 percent share for its partner. Bapex then formed a joint venture with Santos with a 49 percent share and according to the estimation Bapex was to invest Tk. 300 crore for the exploration as a partner.
However, after a few chaffers both the organizations settled it to TK 230.8 crore and the Bapex approved it in its 372nd board meeting.
Energy and Mineral resources ministry sources stated that the amount required to meet the exploration cost will be managed by the Gas Development Fund (GDF) Santos would get the money within 31st January once it gets sanctioned.