Two Indian oil cos get 3 more years for explorations

The Energy Division has extended the schedule with ONGC Videsh Ltd and Oil India Ltd (OIL) for next three years to carry out the mandatory contractual obligations for hydrocarbon exploration in shallow-water blocks SS-04 and SS-09. It also set to sign an 'unusual agreement' with the South Korean oil and gas firm Posco International for next one year, Energy Division sources told the Daily Observer.

"The state-run Oil, Gas and Mineral Corporation, Petrobangla, moved for the extension, one year back, to extend the contracts in response to the demand made by ONGC/OilIndia and Posco for reviewing the existing work plan and 'commercial term' of its contract signed with Petrobangla, however, we consider the plan due to pandemic situation, as when it would be normalized we don't know, we cannot go for fresh bidding round soon," Energy Division Senior Secretary Mohammad Anisur Rahman told this correspondent.

According to the Petrobangla, ONGC failed to do its obligatory job within the signing date of first 5 years, which includes 2D survey and an exploratory well drilling job, however, Posco sought a favourable cost recovery provision in the production sharing contract (PSC) which will help the international oil company retrieve its investment early, which is 'unusual.'

Earlier, Posco had informed Petrobangla and the Energy Division that it plans to relinquish deep sea block DS-12.
"It said that as the investment in deep sea exploration is huge and construction of a deep sea pipeline  is complex and expensive too, the agreement price (what it signed earlier) is not enough," the official said.

Some 1.70 kilometres of depth will require to be drilled in the deep sea block to determine any hydrocarbon prospect and some US$2.0 billion will be required for building an undersea pipeline to carry discovered gas to shore, said sources.
Officials said Posco initiated its hydrocarbon exploration job as part of a joint venture with another South Korean firm Daewoo Corporation. The JV of Korean Posco and Daewoo had inked the PSC with Petrobangla in December 2016 under the Speedy Supply of Power and Energy (Special Provisions) Act 2010, bypassing tendering. However, the ONGC Videsh Ltd and Oil India Ltd (OIL) were awarded the contract in 2014.

Currently, no oil and gas exploration is being carried out in Bangladesh's deep offshore blocks excepting by Posco.
Under the PSC, Posco would get natural gas at around $6.50 per mmBtu (million British thermal unit) with a 2.0 per cent annual price escalation from the date of first gas production. Before relinquishing the plan, Posco carried out two-dimensional (2D) seismic survey in around 3,580 kilometre areas, which is double the committed area for the survey.

Bangladesh is trying to promote the exploration in the Bay of Bengal to help meet its soaring energy demand but it failed to do any exploratory job in the last 10 years. Although it planned to float the bidding on March 17 in 2020 and the deadline for receiving bids from international oil companies on March 10 in 2021 but the corona virus had halted all activities, so the contract are being extended, a senior official told this correspondent preferring anonymity.