THE settlement of maritime boundary dispute between Myanmar and Bangladesh by the international court in 2012 was a landmark event for both the countries that were engaged in disputes on oil gas exploration issues near their mutual maritime boundaries. Since the settlement, Myanmar has moved forward with active programmes by engaging competent oil and gas explorers in its offshore blocks.
Bangladesh, on the other hand, has been slow and less active in venturing into any offshore exploration programme. From a geological perspective, it is now believed that the maritime boundary area between Bangladesh and Myanmar holds the most prospective oil and gas structures among all the offshore blocks of both countries, therefore, the next big discoveries in the Bay of Bengal are likely to take place there. Petroleum observers point out that should a single gas discovery fall on both sides of the boundary, the country that drills there first would get the most benefit from it as the underground oil or gas pool is blind to any geographic boundary.
Following the settlement of maritime boundary dispute, Myanmar redesigned its offshore blocks. In April 2013, Myanmar floated invitation for application for offshore exploration licences by international oil companies (IOC). A total of 75 IOCs showed interest, 61 were shortlisted and finally 30 submitted formal proposal for block licences. The state-owned Myanmar Oil Gas Enterprise (MOGE) took about a year to finally award IOCs 20 offshore blocks, mostly in Rakhine basin off the Arakan coast south of Teknaf (Bangladesh) area. Among those awarded are Royal Dutch Shell, Norwegian Statoil, USA-based ConocoPhilips and Chevron, French Total and Italian Eni. Indian Oil India Ltd and Reliance Industries were also winners in some blocks. As per the rules of MOGE, the successful oil companies for the shallow water blocks are required to partner with a minimum of one Myanmar nationally-owned company. The companies have started exploration activity.
In contrast, the Bangladesh bidding round announced in 2012 received only lukewarm response from the IOCs. Bangladesh invited bids for 11 offshore blocks at that time. Only 3 shallow sea blocks were finally awarded to IOCs in 2014 and no bid was received for the deep sea blocks. None of the globally renowned oil giants applied for any block. According to the IOC representatives, the incentives for the IOCs to explore offshore, especially in the deep offshore, have not been up to their expectation. The issue of gas price has been at the centre of disagreement between the IOCs and the government.
In the 1970s, both Bangladesh and Myanmar had their respective offshore areas explored by IOCs. In both cases the exploration did not bring success and the IOCs quit with negative impression so far as oil and gas prospects were concerned. In the mid 2000s, gas exploration in offshore Myanmar turned around in a positive way. A number of major gas discoveries in the offshore Rakhine basin in Myanmar have shown that the area, previously condemned as only poorly prospective, is indeed one of the most prospective in the whole of Bay of Bengal. The discovery of Shwe, Shwe phu and Mia gas fields in the offshore Rakhine basin was made by a consortium of Korean Dawee Oil and Indian ONGC. Incidentally, India discovered similar, if not larger, gas discoveries offshore in Krishna-Godavari basin off the Andhra Pradesh coast in the south.
But how could Myanmar turn the Rakhine basin from an area of no or limited interest to an area where major oil giants have their eyes targeted for hydrocarbon. This was done by renewed and latest technology-based interpretation of the old geologic data. A new breed of geoscientists came up with new theories which negated the older interpretation and pessimistic outlook of the gas prospect. The new discoveries were made when drilling programmes were launched based on the new theory.
How would one put the new theories and discoveries in Myanmar in perspective of Bangladesh offshore gas exploration? On both counts, i.e. in terms of good quality reservoir and bacterial gas generation, Bangladesh offshore blocks, especially in the south east, stand out equally with Myanmar’s. Furthermore, the Rakhine offshore basin in Myanmar and the southeastern offshore blocks of Bangladesh (off Teknaf-Chittagong coast) geologically belong to the same structural unit known as the fold belt. Therefore, the geologic processes that created the large gas pool in the Rakhine basin should theoretically also be at work in the adjacent Bangladesh offshore blocks. A logical conclusion is that the Bangladesh offshore blocks SS-9, SS-10, SS-11 and SS-12 hold the most prospects for gas. In addition, the other eastern offshore blocks have high probability of containing hydrocarbon.
Bangladesh now has 26 offshore blocks, of which 11 are shallow sea and 15 are deep sea blocks. Since the maritime boundary settlement with Myanmar, Bangladesh has activated only 3 shallow sea and 2 deep sea blocks under Production Sharing Contract (PSC) with IOCs. These 5 blocks are held by USA- based ConocoPhillips, Australian Santos, Singapore-based KrisEnergy and Indian ONGC. Recently, ConocoPhillips, which holds 2 deep sea blocks, expressed its intention to quit if the gas price was not increased, a demand considered unjust by any reckoning. Should ConocoPhillips leave, there will be only 3 offshore blocks active out of 26 blocks. This is not a reasonable exploration effort by any standard.
Bangladesh is planning to make multi-client survey for its offshore blocks before awarding them to IOCs. The advantage of multi-client survey is that the host country has a better negotiating platform because of the known data base for its blocks. But it will take more than a year for making the survey at this stage. It will be unwise for Bangladesh to keep the PSC activities on hold until the multi-client survey is completed. Bangladesh may launch block bidding for the known prospective southeastern offshore blocks and go for multi-client survey for the blocks for which little or no data are available. Bangladesh should also make it mandatory, like Myanmar, that IOCs which are awarded shallow offshore block must have a Bangladeshi company (Bapex for example) as partner. Bangladesh can build up its offshore exploration capability in this way. Bangladesh has to come out of its present status of ‘too little too late’ in oil gas exploration in the Bay of Bengal.
Source: The Daily Star