South Korean Daewoo International Corporation has agreed to carry out exploration in three deep sea blocks in the Bay of Bengal in accordance with terms and conditions offered by Petrobangla, a senior official said Wednesday.
Daewoo and Petrobangla recently discussed the proposed terms and conditions and modalities for exploring the blocks — DS-12, DS-16 and DS-21 – where the South Korean firm was keen to explore under the current terms and gas pricing, said the official.
It would be beneficial for the country’s energy sector if Daewoo sticks to its position and inks production sharing contract (PSC) for exploring these three blocks, the Petrobangla official added.
Daewoo was the lone firm that submitted request for proposal (RfP) documents to explore and develop oil and gas resources in the deep sea blocks.
Two other international oil companies (IOCs) — Singapore-based KrisEnergy and Norway’s Statoil — were also interested to explore the blocks.
Petrobangla offered an annual hike of natural gas price by 2.0 per cent from first gas production under the revised model production sharing contract (PSC) to lure IOCs for oil and gas exploration in three deep water blocks under the 2012 bidding round.
Other provisions include significant fiscal and commercial improvements from the previous 2008 PSC like higher price for gas, enhanced annual cost recovery limits, tax waiver for contractors for the entire life of the project, no transmission tariff and scope to sell gas to a third party within the country.
The price of gas from the new deepwater blocks has been pegged to high sulfur fuel oil (HSFO) prices and the floor price for HSFO has been fixed at US$100 per tonne and the ceiling price at $200 per tonne.
It works out the price at around $6.5 per Mcf (1,000 cubic feet).
Petrobangla earlier had awarded these blocks to a joint venture (JV) of US’s ConocoPhillips and Statoil in April 2015 under the previous 2012 bidding round.
ConocoPhillips later had backed out from signing PSC on grounds of ‘poor fiscal terms’ in the PSC in April 2015 leaving Statoil alone.
All the deepwater blocks are located in depth ranging from 20 to 200 metres, having the size of 3,560 sq kms, 3,353 sq kms and 3,204 sq kms respectively.
The contractor will bear all the costs. Recovery of the costs is subject to discovery of petroleum.
The country is currently dependent on onshore fields for its entire natural gas output.