Deep sea gas exploration deal with Daewoo Wednesday
Dhaka: State-owned Petrobangla will ink an initial deal on Wednesday with Daewoo International Corporation for gas exploration in deep sea block-12 in the Bay of Bengal.
According to Petrobangla chairman Ishtiaque Ahmad, after a long process of negotiations both sides agreed to sign the "initial" agreement on Wednesday in a simple ceremony at Petrobangla headquarters in the city, reports news agency UNB.
"Once the initial deal is signed, the draft copy of the agreement will go to the Law and Parliamentary Affairs Ministry for its vetting. If it clears the deal, then both sides will ink the final deal," said a deputy general manager of Petrobangla preferring not to be named.
He, however, noted that before the singing of the final deal, Petrobangla will have to seek the approval of the Cabinet Economic Affairs Committee and Cabinet Purchase Committee.
The Petrobangla official said the Korean company is getting the gas block through an unsolicited process under the 'Prompt Power and Energy Supply (Special) Act-2010' which means there was no open competitive bidding process in awarding the contract.
As per the understanding between the two sides, the Korean company will get two years instead of three years for initial exploration and four years instead of five years for subsequent exploration, he noted. The Korean firm submitted the bid in the name of 'POSCO Daewoo Corporation'.
As per settlement in the negotiation, Daewoo will first conduct a 2D seismic survey to start exploration. It did not agree to make any commitment to conduct a 3D survey.
"But if the gas block is found to be prospective in 2D survey result, Daewoo will take a decision on 3D seismic survey execution," said a Petrobangla official who was involved in the negotiation.
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, is expecting to develop offshore gas fields in Bangladesh’s deep sea gas block-12.
The deep sea block 12 is located near the Thalin-1A gas exploration well in 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 that there is a good chance 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).