State-owned Petrobangla on Monday signed a production sharing contract (PCS) with Indian ONGC Videsh Ltd for hydrocarbon exploration in two gas blocks — SS-4 and SS-9 — in the Bay of Bengal.
Oil India Limited (OIL), a partner of the ONGC, signed the deal although initially its name was not heard as a partner.
“Oil India was from the beginning of the bidding process with us with 50 percent partnership in the venture,” ONGC’s managing director DK Sarraf told reporters.
The two Indian companies under the “joint venture” got the two blocks as the lone bidder in the international bidding invited early last year, said Petrobangla director Imaduddin.
Speaking at the signing ceremony at Petro Centre of Petrobangla in the city, Finance Minister AMA Muhith urged both Petrobangla and the Indian company to run the exploration work cautiously so that the biodiversity is not harmed.
The function was also addressed by Prime Minister’s Energy Advisor Dr. Tawfiq-e-Elahi Chowdhury, State Minister for Power and Energy Nasrul Hamid, Indian High Commissioner Pinak Ranjan Chakraborty, Energy Secretary Mozammel Haque Khan and Petrobangla Chairman Dr. Hussain Monsur.
Addressing the function, the Indian High Commissioner said the two countries have entered a new chapter through signing the deal as both the countries will be benefited from it. “Both the countries can work together to secure the energy security,” he said.
The areas of the two gas blocks, given to the ONGC, ranges from 4,463 to 7,692 sq km (1,723-2,970 sq miles) in the Bay. The water depth ranges from 10 to 300 metres.
As per the signed PSC, the ONGC will get eight years’ time to carry out exploration of which five years for initial exploration and three years for subsequent exploration. It will also conduct two 2D seismic surveys in the two blocks as mandatory works and drill two wells there.
The company will also deposit a guarantee of US$ 38.4 million for initial exploration and then $ 20 million subsequent exploration for block SS- 04 while $ 64.8 million for initial exploration and $ 21.6 million for the subsequent exploration of block SS-09.
The deal says if any discovery is made in the petroleum exploration, the ONGC can take its 55 percent of the discovered gas for cost recovery in a year while after cost recovery, Petrobangla will get maximum 60-85 percent of the profit gas and 70-90 percent of the oil and condensate. The remaining portion will go to the ONGC.
The state-owned Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) will have a 10 percent carried interest stake in the two blocks.
The gas price of these two 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 if Petrobangla refuses to buy its gas.
Petrobangla invited international bidding for nine (9) blocks in December 2012 where US-based ConocoPhillips and Indian ONGC participated, and also became the lone bidder 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 due to turbulent political situation in the country.
But, after assuming office by the Awami League government through the January 5 general election, ONGC Videsh Ltd responded positively to the government’s invitation to sign the contract.
Source: UNBConnect
