Friday, June 17, 2011

US IOC Awarded 2 Deep Sea Gas Blocks

Ignoring public opposition and expert suggestion, the state-owned hydrocarbon corporation Petrobangla signed the deal with US-based international oil company (IOC) on Thursday awarding two deep sea gas blocks.    Petrobangla secretary Imam Hossain and deputy secretary AKM Mohiuddin from the government and ConocoPhilips Asia Pacific vice- president William Laflarrendre signed the agreement at Petrocentre in the city's Karwan Bazar on Thursday.    Finance minister A M A Muhith, prime minister's energy adviser Tawfiq-e-Elahi Chowdhury, state minister for power and energy Enamul Huq, energy secretary Mesbahuddin Ahmed and US ambassador James F Moriarty were also present at the signing ceremony.    The energy giant will start its seismic survey by December in deep sea blocks 10 and 11 , an area of 5158 square kilometres.    The depth of water is between 1000 to 1500 metres and the blocks are about 280 kilometres from Chittagong Port. The firm under its mandatory work programme must initiate seismic survey in a grid of 10 km by 10 km space over the whole of the blocks. The Texas-based company has pledged $160 million bank guarantee for working in three phases and the contract period is for nine years.    The Cabinet Committee on Economic Affairs earlier on May 23 approved a proposal for signing a model production sharing contract (PSC) with ConocoPhillips for exploration of hydrocarbons in the country's deep-sea blocks 10 and 11 and also a side line agreement (SLA) for disputed areas under the two blocks. Earlier, both Petrobangla and the US company initialed a draft of the Model PSC. Ahead of signing the deal, the IOC has created a new special company named ConocoPhillips Bangladesh Exploration 10 /11 Ltd in order to run the Bangladesh operation.    Petrobangla officials said though the ConocoPhillips will obtain two gas blocks in Bangladesh territory of the Bay of Bengal through the PSC deal, it will have to keep its exploration confined only within the undisputed areas in the Bay.    "The US Company would not be allowed to conduct any exploration works in 30 percent area of block 10 and in 15 percent area of block 11 ," said a Petrobangla official. Because, he explained, those areas are treated as disputed due to the neighbouring countries —- India and Myanmar —- also making claims there.    Bangladesh went to the UN body —- United Nations Convention on the Law of the Sea (UNCLOS) —- to settle the disputes. "If Bangladesh wins the battle in the UNCLOS, then the ConocoPhillips will be allowed to conduct exploration work in those 30 percent and 15 percent areas in block 10 and 11 respectively," said the official adding that the proposed SLA will provide such guarantee to the US oil major.    Bangladesh invited international bidding in 2008 for gas exploration in offshore and deep sea areas, and ConocoPhillips came out to be the responsive bidders for as many as eight blocks.    Finally, the government decided to award only two blocks to ConocoPhillips. The US company plans to start exploration from next year, but it will take 4-5 years to get result from the exploration works, Petrobangla officials said.         NCPOGMR's protest    Meanwhile, the National Committee to Protect Oil-Gas and Mineral Resources (NCPOGMR) staged a demonstration in front of National Press Club in protest against the government's decision to award two gas blocks to the ConocoPhillips.    Addressing the protest programme, committee leaders said the government signed the agreement undermining the national interest and thus betrayed the causes and spirit of the independence.