Deal likely with Daewoo for gas exploration in deep sea

State-owned Petrobangla is likely to complete its negotiations with South Korean Daewoo International Corporation for the exploration of gas in deep sea block No-12 in the Bay of Bengal, reports the UNB.

 

According to sources, both Petrobangla and Daewoo primarily reached an understanding on most of the issues, including gas pricing. Just a few issues, including a work plan for conducting 2D and 3D surveys, remain unsettled.

 

Petrobangla started negotiations with the Korean company last month for offshore gas block No-DS12.

 

Petrobangla has asked the Korean company to submit a revised plan on timeline for the 2D and 3D seismic surveys to be carried out in the block.

 

Petrobangla had received unsolicited proposals from three international oil companies for three deep sea blocks-- DS12, 16 and 21-- located at depths ranging from 20-200 metres, comprising an area of 3200-3600 square kilometers in the Bay of Bengal in Bangladesh.

 

The other two companies, which are also in the process of negotiation for the gas exploration in the bay, are Singapore-based Kris Energy, and Norway’s Statoil. They have also submitted their respective proposals, said Petrobangla officials.

 

In the move for awarding gas blocks, Petrobangla first sat with Daewoo to discuss its offer. After a few days’ successive discussions, both sides reached an understanding on major points, including gas pricing.

 

“We've offered $6.5 dollar per unit (1000 cubic feet) of gas and Daewoo accepted it and there was no disagreement on the gas pricing proposal,” said a top Petrobangla official who was a member of the negotiation team.

 

That means, he said, 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 the IOC will get as its share under production sharing contract (PSC).

 

Sources said Petrobangla offered an annual hike of natural gas price by 2.0 percent from first gas production under the revised model production sharing contract (PSC).

 

But there were some differences of opinion on the timeline of 2D and 3D surveys. Daewoo had submitted a work plan for conducting 2D and 3D surveys in the block 12 with a long timeframe.

 

“But Petrobangla asked them to reschedule the plan reducing the timeframe of the work and finally Daewoo agreed with the request,” said a top official of Petrobangla who was a member of the negotiation team.

 

Contacted, Petrobangla director (PSC) Mohammad Quamruzzaman, however, declined to give any detail of the negotiation with the Korean company.

 

“Everything went well throughout the negotiation with Daewoo. We’re hopeful of reaching a conclusion within a month,” he told.

 

Petrobangla officials said once the negotiation is completed with Daewoo, Petrobangla will subsequently sit with the remaining two companies-- Kris Energy and Statoil-- for the two remaining blocks-- DS16 and 21.

 

Of the two companies, Statoil had long been engaged in negotiations with the government over the blocks without any breakthrough. The Norwegian company submitted its own request for proposal (RFP) on the same date to stay in the race.

 

Petrobangla Chairman Ishtiak Ahmed earlier said the government’s final target is to complete the gas block awarding process by September this year to allow the companies to utilize the coming dry season for exploration purposes.

 

Officials said in view of previous failures, Petrobangla is proceeding with a more flexible policy approach this time to try and reach a conclusion with the IOCs.