Dhaka, Mar 12: State-owned Petrobangla signed a production sharing contract (PSC) on Wednesday with Santos-Kris Energy, an Australia-Singapore joint venture, for the block No-SS-11 in the Bay of Bengal.
Officials at the Energy Division, Petrobangla, Santos, Kris Energy and Bapex signed the contract on behalf of their respective sides at a function at Petrobangla. Finance Minister AMA Muhith was present as the chief guest.
Santos-Kris Energy JV won the block SS-11 by participating in a re-tender in July last year as a lone bidder.
Petrobangla first invited tender in December last year and received offer from IOCs in April last year where only two IOCs submitted bids for three blocks. At that time, a total of nine (9) blocks were placed for bidding.
In that bidding, the US-based ConocoPhillips and the Indian ONGC won three offshore shallow blocks. ConocoPhillips won the bid for block No.SS-07 while the Indian ONGC’s offers were found for blocks No.SS-04 and SS-09 in the Bay of Bengal. All the three blocks are located in areas in the Bay where there is no dispute with neighbouring India or Myanmar.
The ONGC last month signed its contract for two blocks.
Santos-Kris JV has offered a work programme for 870 km 2D mandatory seismic survey and 300 km mandatory 3D survey. It has given a US$ 15 million bank guarantee.
Santos will get eight years’ time for its exploration works of which five years for initial exploration and remaining three years for subsequent exploration if the initial exploration works are found to be potential.
The Australia-Singapore joint venture will conduct its work in 4,475 sq km of areas with water depth of 100-1000 (320 ft to 3200 ft) in the offshore.
Under the contract, Petrobangla will get minimum 55 to maximum 80 percent share in the profit petroleum of the project. The contractor can sell its gas to any third party if and when Petrobangla refuses to buy its gas.
The petroleum price will be set on the basis of HSFO Singapore floor price at $100, and celling price at $200. In that case, the price of each unit gas will be $5.5 (1000 cubic feet).
The contractor will have to pay corporate tax and other taxes while it can claim compensation if petroleum operation is suspended for any dispute.
Speaking on the occasion, the Finance Minister said the government has been giving highest importance to the development of the energy sector as it has been the key to any development of the civilization.
He said the government will continue its efforts to achieve energy security.
The function was also addressed by Prime Minister’s Energy Adviser Dr. Tawfiq-e-Elahi Chowdhury, State Minister for Power and Energy Nasrul Hamid, Energy Secretary Mozammel Haque Khan, the Singapore Consul General in Dhaka, and top officials of Petrobangla and Santos Energy.
Tawfiq-e-Elahi said many people may criticise the rental power plants, but the government had no option but to resolve the nagging power crisis.
Nasrul Hamid said the present government has a vision to place Bangladesh on the list of an oil-producing country.
He said Petrobangla will sign another contract within a month with another foreign company for hydrocarbon exploration.