Dhaka: State-owned Petrobangla has finally completed its negotiation with Daewoo International Corporation for the exploration of gas in deep sea block-12 in the Bay of Bengal and put forward its proposal seeking approval to sign a deal with the South Korean firm.

The negotiation was completed on the basis of unsolicited offer under the 'Prompt Power and Energy Supply (Special) Act-2010' which means there was no open competitive bidding process.

‘We've completed negotiation and sent our proposal to the Energy Division to place it to the Cabinet Economic Affair Committee,’ Petrobangla chairman Ishtiak Ahmed told UNB.

He informed that the state-owned hydrocarbon corporation has completed the negotiation with the Korean company with reduced timeframe for exploration.

Now the Korean company will get two years' time instead of three years for initial exploration and four years instead of five years for subsequent exploration, he noted.

Energy Ministry officials said the Petrobangla proposal has already been sent to the Cabinet body and once approved, an initial deal will be signed with the South Korean company for the block. The Korean firm submitted the bid in the name of 'POSCO Daewoo Corporation'.

‘Then the initial deal will be sent to the Law Ministry and some other government agencies like NBR, and Bangladesh Bank for some necessary vetting. The final deal will be signed after getting clearance from them,’ said a top official at the Energy Division.

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 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.

Officials said it took more than four months to complete the negotiation with Daewoo for the gas block DS-12.

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 just one block DS-12. ‘No proposal was found for any other blocks from any company,’ said the Petrobabngla chairman.

He said possibly the falling petroleum price on the global market might have worked as a major reason behind their unwillingness.

Official sources said Daewoo accepted the Petrobangla offer a t$6.5 per unit (1000 cubic feet). 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 it will get as its share under production sharing contract (PSC).

Petrobangla officials said the government's final target was to complete the gas block awarding process by September this year to allow the companies to utilize the coming dry season for exploration purposes.

But now with the delay in completing the negotiation process, it might not be possible to utilise the coming dry season—October to March—for exploration works as no deal was signed as yet, they said.