Bangladesh floats drilling tender

Dhaka: Energy-starved Bangladesh has floated a long-awaited offshore tender to drill for oil and gas in the hydrocarbon-rich Bay of Bengal.

State-run Petrobangla has offered eight shallow blocks and 20 deepsea blocks, categorised as Types A and B, covering an exploration area of 3,000 to 7,000 square kilometres.

The interim cabinet this month approved the bidding, the first of its kind in which the focus is exclusively on the Bay of Bengal, asking for offers from international oil companies by May 7.

Preparations for the tender have been underway since 2006.

Experts and energy anal-ysts have long been calling for greater exploration of the offshore energy deposits since current estimates indicate the present confirmed reserves will be exhausted by the late 2020s, heightening the country's energy insecurity.

Success

India has been exploring the Bay heavily in recent years and has so far discovered 100 trillion cubic feet (tcf) of gas and two billion barrels of oil. Myanmar last year discovered seven tcf of gas in an offshore area.

Petrobangla also announced some important features of the contracts being offered in the tender. They include full repatriation of profits, no signature bonus or royalties, and no duty imposed on equipment and machinery imported for exploration, production and development.

The winning bidders will also be allowed to conduct local marketing of gas if the government refuses to buy it first under the model production sharing contract (PSC) 2008.

The contractors must also conduct a seismic survey programme and drill one test well in each block.

The international oil companies earlier sought to export gas to India, saying the small local market would make it unlikely that they could expect a quick recovery of their investments. But a national committee on hydrocarbon resources suggested that the government could consider exporting gas only if new reserves were discovered.

Petrobangla has offered a higher price for the gas compared to the last production-sharing contract in 1997-98 to attract international bidders

Scotland-based Cairn Energy currently operates Bangladesh's sole offshore gas field at Sangu, 50 kilometres off Chittagong.

It produces around 70 million cubic feet of gas per day. The well is likely to be exhausted in four years.

Timeline: first contracts in 1974

The country's total gas production is around 1,700 mmcfd.

Bangladesh signed its first production sharing contracts (PSC) in 1974 while the next major round occurred in 1993, after the promulgation of the National Energy Policy in the first round of PSC.

A second round of contracts was awarded in 1997, under which a number of contracts were signed by 2001.