Top global energy giants in the race for gas exploration
Over two dozen global energy giants including US-based Chevron, China's CNPC International, UK's British Petroleum and India's ONGC Videsh Ltd, participated in the first-ever international road show organized by Petrobangla, the state-owned oil, gas and mineral exploration company, in Dhaka, that plans to offer 28 blocks for offshore exploration rights. Each of the 28 blocks eight shallow water and 20 deep sea blocks has an exploration area cover of between 3,000 square kilometers (sq km) and 7,000 sq km. Estimates of reserves in these 28 blocks, to be thrown open for bidding, were not immediately known. Petrobangla officials are scheduled to sit today (March 31, 2008) with executives of prospective bidders individually to know their current status for participating in the bidding process. The offshore hydrocarbon exploration bidding has gathered widespread interest among investors all around the globe.
This bidding is the first of its kind with an exclusive focus on the Bay of Bengal. According to some earlier media reports of India , India has been heavily exploring the Bay in the recent years and has discovered 100 trillion cubic feet (tcf) gas and two billion barrels of oil in place. Even Myanmar last year discovered 7 tcf gas in an offshore area, which may be overlapping Bangladesh maritime boundary.
Petrobangla had so far sold 17 promotional and 32 information packages to International Oil Companies (IOC) for their participation in the offshore bidding process. In the road show held on Sunday for the "Bangladesh Offshore Bidding Round 2008", 113 representatives from IOCs met Petrobangla officials at the city's Pan Pacific Sonargaon Hotel. In all, 76 local and global companies participated at the road show and expressed interest in the bidding process to explore energy in the offshore areas. Companies have to submit bids for the current round by May 7. Petrobangla had in February 2008 announced the details of the current round of bidding. Petrobangla hopes to wrap up the agreement with prospective bidders by October this year. The evaluation of applications is scheduled to be completed by May.
Foreign companies would be able to participate through the joint venture route as per the arbitration rules of Bangladesh in energy exploration. But they must have a local office in Bangladesh. According to Petrobangla, some major characteristics of the biddings are - 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.
Other features are: the contractor will give a carried stake of 10 percent to the government only for shallow offshore blocks, it will enjoy the provision for assignment, 100 percent cost recovery, maximum 55 percent cost recovery per calendar year and oblige to a mandatory seismic program and one well for each block exclusive of biddable work program.
The contract will enjoy a discount on gas sale, discovery and production bonuses and annual contract service fee and the contractor will be allowed local marketing of gas only if the government refuses to buy it first. The bid winning companies will enjoy 25 years lease to drill for gas and oil from the blocks. However only the companies having the experience to operate in at least one offshore gas or oilfield, producing 25,000 barrel of oil or equivalent can participate in the bidding.
At the inaugural session of the road show, Special Assistant to Chief Adviser in the Ministry of Power, Energy and Mineral Resources M Tamim said the government was updating the National Energy Policy (NEP) with a view to providing energy for sustainable economic growth and meeting the energy needs of different areas and socio-economic groups of the country. "Over the last decade, gas consumption has been increasing at an average rate of 8 percent per annum. Major consumers of gas are the power plants and the fertilizer factories," he said.
The country's economy is in the juncture of massive transformation. It needs intensive exploration to convert the potential gas resources into reserves for achieving a moderate growth of 7.0 per cent, he added. It will require an additional 24 trillion cubic feet (tcf) gas output for attaining the growth rate by 2025, which will require investments worth US$ 8 billion, said the special aide to chief adviser.
Courtesy
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Equity Partners Limited (EPL)
DSE Annex Building (9th Floor)
9/E Motijheel C.A., Dhaka-1000.
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