Petrobangla set to sign contract with Indian ONGC for 2 gas blocks in Bay


State-owned Petrobangla is set to sign a contract with India’s ONGC Videsh Ltd on Monday for awarding two gas blocks — SS-4 and SS-9 — for hydrocarbon exploration in the Bay of Bengal.


The Indian company got the two blocks as the lone bidder in the international bidding invited early last year.


“We’ve taken all preparations to sign the final deal with the ONGC Videsh,” a senior official of Petrobangla told UNB. This will be the first signing of a contract to award gas blocks to an Indian company.


The area of the two gas blocks ranges from 4,463 to 7,692 sq km (1,723-2,970 sq miles) in the Bay.


Petrobangla invited international bidding for nine (9) blocks in December 2012 where US-based ConocoPhillips and Indian ONGC participated, and also became the lone bidders for the blocks they respectively bid for.


Conoco’s proposal was for block SS-7 while ONGC submission was for blocks SS-4 and SS-9.  Later, the proposals of the two companies were evaluated as responsive for their respective blocks and also qualified for getting the contract.


At the end of last year, the government invited both the US and Indian companies to sign final PSC with Petrobangla. But both companies were found reluctant in the turbulent political situation.


But after assuming office by the Awami League government again through January 5 general election, ONGC Videsh Ltd responded positively to the government’s invitation to sign the contract.


Officials said that in the model PSC for the shallow water blocks, the gas price has been tagged with high sulfur fuel oil (HSFO) prices. The floor price for HSFO has been fixed at $100 per tonne and the ceiling price at $200 per tonne.


As per this calculation, the gas price of these blocks will be around $5.50 per unit (1,000 cubic feet). Under the largest PSC, the gas field operators will have to pay 37.5 percent corporate tax. The PSC will also allow the contractor to sell their own gas independently to third parties instead of state-owned Petrobangla.


The state-owned Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) will have a 10 percent carried interest stake in all the two blocks.

Source: UNBConnect


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