The state-run energy company Petrobangla has signed a Production Sharing Contract (PSC) for exploration of the gas and oil from the deep sea with keeping an opportunity of exporting them, after winning of the maritime boundary. South Korean resource developer Posco Daewoo Corporation got that opportunity without any competition and signed the PSC with Petrobangla for exploration of gas and oil on block-12 (DS-12) in the deep sea.
This is for the first time the government has signed a PSC with an International Oil Company (IOC) for exploration of the oil and gas after winning of the maritime boundary from Myanmar and India. Daewoo got the lease of DS-12 through an unsolicited process under the Speedy Supply of Power and Energy (Special Provision) Act 2010, which is again for the first time in the history, a company got the lease without any competition. It means there was no open competitive bidding process in awarding the contract.
The deal was signed on this Tuesday at Petrobangla office namely Petro centre situated in the city’s Karwan Bazar area. Prime Minister’s Power, Energy and Mineral Resources Adviser Dr Tawfiq-e-Elahi Chowdhury (BB), state minister for Power, Energy and Mineral Resources Nasrul Hamid, Chairman of the Parliamentary Standing Committee on Power, Energy and Mineral Resources Tajul Islam, Energy Secretary Nazimuddin Chowdhury, Petrobangla Chairman Abul Mansur Md. Fayejaullah NDC, Korean Ambassador to Bangladesh Hun Song Do, Chief Executive Officer of Daewoo Yang Sang Kim were present at the deal signing ceremony.
Deputy Secretary of Energy and Mineral Resources Division Khadiza Nazneen, Secretary of Petrobangla Syed Ashfaquzzaman and Vice President of Daewoo Se Bo Jo signed the production sharing contract (PSC)
Tawfiq-e-Elahi Chowdhury (BB) said that, most of the exploration companies aren’t showing much interest exploration nowadays as the price of oil in the international market is keeping low for the past a year. The PSC was revised to attract OICs in exploration by adding a clause that enables the explorer to export oil and gas. However, the OIC will only be able to export its own portion of oil or gas and the company must ask the state-run Petrobangla to buy the oil or gas at first place. The OIC will be able to sell the oil or gas to abroad once Petrobangla denies to buy it, said Tawfiq-e-Elahi Chowdhury (BB).
Nasrul Hamid said that, the government has taken a lot of steps to secure the country’s energy sector, so there is nothing to worry about the country’s energy security. Tenders will be called to lease the rest of the sea blocks within the next one-two years. Survey ships will be bought soon to explore the assets of the Bay of Bengal, he added.
The Korean Ambassador to Bangladesh said that, Bangladesh’s economic growth is good enough. Bangladesh and Korea have almost the same type of coastal resources and Bangladesh’s coastal resources would help to boost the country’s economy, he added.
According to the contract, the international oil company (IOC) would explore gas and oil from 1,000 to 2,000 metres in the deep sea of the Bay of Bengal and sell gas and oil at competitive prices with profit from 65 percent to 90 percent in oil and 85 percent from 60 percent in gas. The duration of the agreement would be five years at primary level, but the contract would be flexible for increasing its period to three years more. According to the PSC, Daewoo will sell its share of gas to Petrobangla at a rate of $6.5 for per thousand of cubic feet of gas.
Earlier, Petrobangla invited Expressions of Interests (EOI) on September, 28 to explore and develop these two deep-sea blocks and one shallow sea block in the Bay of Bengal. Three international oil companies (IOC) have submitted their EOI to explore oil and gas resources in country’s deep-sea blocks titled DS-10 and DS-11 and shallow sea block SS-10.
Earlier Petrobangla called for an international tender to explore the DS-12 on December 2013. ConocoPhillips and State Oil submitted their respective bids in response to the tender. However, ConocoPhillips later expressed its disinterest in the bid that led to a two-year halt in the bidding process. Later, Prime Minister approved the deal signing with Daewoo on 9th October of the last year. Petrobangla, at last, signed an initial deal on 7th December of 2016.
Petrobangla sources claimed that, Daewoo’s survey result would give an idea of DS-12 block’s reserve of gas or oil within the year 2019.