Petrobangla likely to sign PSCs with Conoco, ONGC in Sept


State-owned Petrobangla is likely to award three shallow water blocks to US-based ConocoPhillips and India’s ONGC Videsh Ltd for oil and gas exploration by September next.


In the international bidding invited early this year, the ConocoPhillips obtained the block SS-7 while ONGC got the blocks SS-4 and SS-9.


According to official sources, the bid proposals of the two IOCs have already received the approval of the government’s top level.


“The Cabinet Committee on Economic Affairs has already given its approval to the proposals,” said Petrobangla director Imaduddin.


He informed that the proposals also received the other vetting by different bodies, including the National Board of Revenue (NBR). “Now we’re hopeful of signing the production sharing contracts (PSCs) with the ConocoPhillips and ONGC by September,” he said.


He noted that Petrobangla will invite the IOCs soon to ink initials by August and then sign the final PSCs by September this year.


If the PSC is signed with ONGC, it will be the first entry of an Indian oil company to Bangladesh. On the other hand, Conoco will get another field in its existing operation in two deep sea blocks.


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


The area of the three blocks ranges from 4,463 to 7,692 sq km (1,723-2,970 sq miles), at water depths of 3-200 meters.


ConocoPhillips and ONGC Videsh Ltd were the only two firms that submitted bids for the total three blocks at the close of bid submission deadline on April 2, against nine shallow water blocks Bangladesh offered in the latest bidding round in December 2012.


Under the model PSC for the shallow water blocks, the gas price has been tagged with high sulfur fuel oil 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 other features of the PSC are: The licence holder will have the right to full repatriation of profits; will not be charged any signature bonus or royalty; would not need to pay duty for equipment and machinery imported for operations during the exploration, development and production phases; will have 100 percent cost recovery; and production bonuses, the official said.


The contractor can also sell gas independently to third parties instead of going through state-run Petrobangla.


The company will be allowed to market the gas domestically as well, but Petrobangla will have the first right of refusal.

Source: UNBConnect