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Bangladesh Paper Reports Oil, Gas Exploration Bids Postponed

Posted on: Sunday, 9 October 2005, 12:00 CDT

Text of report by Sharier Khan, published by Bangladesh newspaper The Daily Star website on 8 October

The government's move to float the third round bid for oil and gas exploration in mid-next year is likely to be delayed beyond next general elections due to a lack of preparations, said a highly- placed energy ministry source. The source said even if all-out efforts are made, Petrobangla [state-owned petroleum exploration company] and the energy ministry would need at least 10 months to prepare for a third round block bidding, exclusively involving the Bay of Bengal region.

These 10 months will however be counted after the government floats a tender for a "speculative" survey. The speculative survey will help the government identify exploration blocks on the basis of energy potentials and primary impression on the geological aspects of the bay.

Moreover, the government needs to approve a policy for the speculation survey before floating the tender. Petrobangla submitted a draft policy to the ministry six weeks ago, but it is yet to be approved. Besides, the foreign ministry will have to complete marking the Bangladeshi territory in the deep sea before the survey starts. Sources said the foreign ministry has a 10-year-old scheme to mark Bangladesh territory, which has not been completed yet.

Energy adviser Mahmudur Rahman, upon taking over the energy ministry, wanted to float the third round bid in December, and then in January next year. The government in the early 1990s floated the first round bidding on unsolicited negotiation basis and the second round bid in 1997.

Both these bids had succeeded in drawing a good number of Production Sharing Contracts (PSC) with more than half a dozen international oil companies. The bids also brought in over 1bn dollars investment and resulted in gas production in Sangu, Jalalabad and Moulavibazar. In addition, a major discovery in Bibiyana is now being developed.

However, as gas consumption forecast signals a supply crisis beginning from 2015, the need for extensive exploration has again been emphasized. The government now wants to tap the bay, which so far remains almost unexplored. An inter-ministerial committee, which includes the energy and the foreign affairs ministries, has been formed to expedite this job.

The draft speculative survey policy looks for surveyor, which will update the 30-year-old data of existing offshore blocks of 19, 20 and 21. "The world now has new technologies that can do better jobs in detecting energy potentials than those used 30 years ago," notes a Petrobangla source. Bangladesh has no survey data on its deep-sea territory and a vast area in the south bay has never been tapped.

The surveyor would roughly spend 9m to 10m dollars on its own to collect the data. It will then sell the data to interested oil companies in the third round bid. The government will also have the data without any investment. Several American and British survey companies have already visited Bangladesh to take part in the upcoming bid for the speculative survey.

"If the government okays the policy tomorrow and we float a tender, we will have to spend two months to receive bids, evaluate them and select a bidder," said a ministry official. "The surveyor will then need four months to physically conduct the survey and another four months to complete interpretation of the data it has gathered. Then on the basis of the data, the government will identify the blocks and float its tender. By that time, the tenure of the current BNP [Bangladesh Nationalist Party] government will end."

Source: BBC Monitoring South Asia

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