http://www.thedailystar.net/story.php?nid=35533
Daily Star, Dhaka, Bangladesh
Thursday, May 8, 2008 12:10 AM GMT+06:00
Front Page
Gas Exploration - Lukewarm response to offshore bidding
Staff Correspondent
In a lukewarm response to the country's first offshore bidding round,
only six oil and gas companies submitted their bids yesterday for 16
out of 28 offshore blocks.
With a few offers overlapping different blocks, the oil companies
offered to invest $1.6 billion. The bids included three offers for
exploration in shallow water blocks.
The second round block bidding in 1998 generated offers from 22 oil
companies, of which Shell Oil alone offered to invest over $2 billion.
The off-shore bidding round was announced in February with 20 deep sea
blocks and eight shallow water blocks--each having exploration area
cover between 3,000 square kilometres (sqkm) and 7,000 sqkm.
Only nine companies demonstrated seriousness by purchasing block data.
The oil companies submitted their bids until 1:00pm yesterday and the
bids were opened after 2:00pm in the presence of representatives of
the oil companies, officials and journalists at the Petrobangla
seminar room.
"Twenty-five companies had purchased our promotional package and seven
companies submitted bids. We are satisfied with the outcome," said
Petrobangla Director (PSC) M Muktadir Ali after the offers were
opened.
Australian oil company Santos International appeared as the top
bidder, making a total investment proposal of $852 million under three
Production Sharing Contracts (PSCs) for six blocks. Santos has joint
venture partnership with British company Cairn and Chinese-US joint
venture Longwoods Resources and Shanghai Zhongman Petroleum (LR &
SZP).
Santos faced stiff competition from US oil company ConocoPhillips that
submitted offers in common blocks. ConocoPhillips offered to invest
$442.63 million under four PSCs for eight blocks.
Chinese-US joint venture Longwoods Resources Ltd, in joint venture
with LR & SZP, offered to invest $170 million in three blocks.
Cypriot oil company Comtrack Services offered to invest $61 million in
two blocks under one PSC, Irish company Tullow Bangladesh offered $50
million in one shallow water block and Chinese oil giant CNOOC offered
$115 million in one shallow water blocks.
A seventh company, Korea National Oil Corporation of South Korea,
submitted a bid for a block along with a bank guarantee proposal of
$2.5 million without making any investment commitment. It stated that
it will conduct 1,000km of seismic survey but did not mention any
expenditure.
Participants at the bid opening session were apparently surprised that
oil giant Chevron did not participate in the bid although it purchased
most block data from Petrobangla.
Muktadir Ali told the press that a bid evaluation committee has
started working on the offers immediately and Petrobangla intends to
sign all PSCs by October this year.
Some important features of the PSCs under this bid include full
repatriation of profit, no signature bonus or royalty, and no duty for
equipment and machinery imported for petroleum operations during
exploration, production and development phases.
THE BIDS
ConocoPhillips offered four PSCs, each for two blocks. These blocks
are 10 and 11, 12 and 17, 15 and 16, and 20 and 21. The US company
offered to conduct 1,200 line kilometres of 2D seismic survey under
each of the PSC in the initial operation period (IOP) of seven years.
After the IOP, during the first extension of contract, the company
promises to conduct 500 sqkm of 3D survey and drill at least one well
under each of the PSCs.
Santos International proffered three PSCs, each for two blocks. These
blocks are 10 and 11, 12 and 13, and 15 and 16. During the IOP for
blocks 10 and 11 and 15 and 16, the company proposes 2,000km of 2D
seismic survey, and 1,000 sqkm of 3D seismic survey. During the first
and second extensions, the company proposes drilling four wells here.
In blocks 12 and 13, Santos offers to conduct 2,400 km 2D seismic
survey and 1,000 sqkm 3D seismic survey in the IOP and drill four
wells in the first and second extension periods.
Both Santos and ConocoPhillips submitted bids for blocks 10, 11, 12,
15 and 16.
In shallow water block 03, Longwoods proposed 1,200 km 2D seismic
survey and drill two wells in the IOP and conduct 1,500 km seismic
survey and more than 500 sqkm 3D seismic survey in the follow up
periods. In blocks 13 and 18, Longwoods also proposed conducting 1,200
km 2D seismic survey and 500 sqkm 3D seismic survey during IOP and
conduct 1,500 km seismic survey and more than 500 sqkm 3D seismic
survey in the follow up periods.
In blocks 9 and 14, Comtrack offered 1,200 km seismic survey in the
IOP, 750 km seismic survey plus 500 sqkm of 3D seismic survey and
drilling of one well in the first extension period and another in the
second extension period.
In the shallow water block of 5, Tullow offers to conduct 570 km of
seismic survey in the IOP, 700 sqkm 3D seismic survey and drill a well
in the first extension period and 400 sqkm 3D survey in the second
extension period.
In shallow water block of 1, CNOOC proposed seismic survey of 1,000 km
each in three phases of the contract, totalling 3,000km, and drill two
wells in the two extension periods.
LUKEWARM RESPONSE
This bidding is the first of its kind in the country where the focus
is paid exclusively on the Bay of Bengal. India has heavily explored
the Bay in recent years and has discovered 100 trillion cubic feet
(tcf) gas and two billion barrels of oil in place. Even Myanmar in
2006 discovered 7 tcf gas in an offshore area which may be overlapping
with Bangladesh maritime boundary.
Despite huge prospects, the bid failed to generate a lot of offers
because of several factors, said a few Petrobangla officials.
Petrobangla has been preparing for this block round since 2006. But
unlike the past bids, Petrobangla did not stage any road shows abroad
to attract oil companies. In addition, presently some other countries
are holding their own block bidding, which kept many oil companies pre-
occupied.
Finally, there are doubts about maritime boundary of some blocks close
to India and Myanmar.
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