State-owned Petrobangla has signed a production sharing contract (PSC) with Santos-Kris Energy, an Australia-Singapore joint venture for hydrocarbon exploration in block 11 of shallow water in the Bay of Bengal.
Under the deal Petrobangla’s subsidiary, Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) will have 10 per cent profit share in the gas.
The cost recovery will be a maximum 55 per cent per year of gas output. The joint venture has also offered 55 to 80 per cent profit share to the government in case of gas or oil discovery while the rest will go to the contractor.
Again, BAPEX will get 10 per cent as carried interest from the contractors.
The block -11 is located at southeast offshore from Bangladesh and close to Myanmar’s sea territory. Officials of the Energy Division, Petrobangla, Santos, Kris Energy and Bapex signed the contract at Petrobangla head office in the city.
Finance Minister AMA Muhith, Prime Minister’s Energy Affairs Advisor Tawfiq-e-Elahi Chowdhury and State Minister for Power, Energy and Mineral Resources Nasrul Hamid Bipu were present at signing ceremony.
The exploration company will offer the oil and gas to Petrobangla. The contractor can sell its gas to any third party if Petrobangla refuses to buy.
As per the model production-sharing contract, gas price for the shallow sea block has been pegged to Singapore based high sulfur fuel oil price and the floor price for HSFO has been fixed at US$ 100 per tonne and the ceiling price at $200 per tonne.
Under the deal, Santos and Kris-Energy will put US$ 15 million as guarantee for an initial eight-year initial period.
Under the Model PSC-2012, Petrobangla had last year invited tender for a total of nine blocks and received offers from three oil-gas exploring companies for four blocks. But there was no competitor for any of the four blocks in the deep sea.
The government on February 17 this year signed a production-sharing contract (PCS) with Indian state-owned Oil and Natural Gas Corporation (ONGC) Videsh Ltd and its partner Oil India Ltd for hydrocarbon exploration in two gas blocks — 4 and 9 — in the shallow water in the Bay of Bengal.
Besides, the Petrobangla has said that it would sign another deal with US oil-gas exploring company ConocoPhillips for block-07.
“There’s no alternative to energy for development. I hope that the objectives of the agreement will be achieved,” Finance Minister Muhith said at meet.
The Australia-Singapore joint venture will conduct its work over 4,475 sq km with water depth of 100-1000 (320 ft to 3200 ft) on the offshore block 11. It will also conduct a three-dimensional seismic survey across at least a 887 km line in the block.
As per the contact conditions, of the total manpower to be engaged in the oil-gas exploration work, at least 50 percent should be recruited from Bangladesh.
And in extraction operation, at least 90 percent of the recruits must be from Bangladesh.
In Bangladesh, fertiliser production is entirely depended on gas supplies. Besides, over 70 percent of the country’s electricity comes from gas-driven plants. The government has been facing difficulties in regularly supplying gas to about 2.5 million consumers including industrial and household units. The government hopes any new discovery will help to mitigate the acute gas shortage to help trade and industry to go for more expansion.
Source: Weekly Holiday