Dhaka – Keeping an option for allowing export, state-owned Petrobangla signed an initial deal on Wednesday with Posco Daewoo International Corporation to award the deep sea gas block DS-12 in the Bay of Bengal for gas exploration.
The final deal between the two sides will be signed after vetting by the Law Ministry and approval by the Cabinet Purchase Committee.
Petrobangla director (PSC) Mahbub Sarwar and Posco Daewoo new venture exploration manager Junggooo Junn signed the contract on behalf of their respective sides.
Energy secretary Nazim Uddin Chowdhury and other top officials of Petrobangla and Posco Daewoo were present on the occasion.
The government awarded the contract under the ‘Prompt Power and Energy Supply (Special) Act-2010’ which means there was no open competitive bidding process in awarding the contract.
After the discovery of any gas, the South Korean company will offer Petrobangla to buy its portion of gas to be obtained under production sharing contract (PSC), according to the export provision.
“If Petrobangla refuses to buy the gas, then Posco Daewoo will offer a third party within the country to buy it. If the third party refuses then the Korean company will be allowed to export,” said deputy general manager of Petrobangla chairman Istiaque Ahmad at the signing ceremony.
As per the contract, Posco Daewoo will conduct a 2D seismic survey and drill an exploration well during the first two years. If the block is found to be potential, then the company will conduct a 3D survey.
South Korean resource developer Posco Daewoo Corporation, which has been engaged in exploration of a nearby gas block in the maritime area of neighboring Myanmar, expects to develop offshore gas fields at Bangladesh’s deep sea gas block-12.
The deep sea block 12 is located near the Thalin-1A gas exploration well at block AD-7 of Myanmar that the Korean resource developer succeeded in discovering gas reserves in February this year.
Considering similar geographical features as the block AD-7, energy experts think there is a good chance that the block 12 of Bangladesh would contain similar gas reserves.
International media report said Posco Daewoo started commercial production of gas at Myanmar’s offshore blocks A-1 and A-3 in July 2013 and also has been exploring another natural gas well AD-7 after locating a large gas reservoir in February this year.
Initially, Petrobangla sought expression of interest for three gas blocks -deep sea (DS)-12, DS-16 and DS-21 and received unsolicited proposals from three international oil companies for the blocks located at depths ranging from 20-200 metres, comprising an area of 3200-3600 square kilometers in the Bay.
But when final offer was sought under “request for proposal (RFP)”, only Daewoo responded on just one block, DS-12.
Official sources said Daewoo accepted the Petrobangla offer at $6.5 per unit (1000 cubic feet). That means when there will be any gas discovery, the government will get its own portion and also buy gas from the IOC at this rate which it will get as its share under production sharing contract (PSC). -UNB
