Petrobangla to sign unsolicited deal with Posco Daewoo tomorrow
First of its kind exploration contract to be finalised
STAFF REPORTER
Petrobangla, the state-owned energy company, will sign a deal with South Koreas Posco Daewoo Corporation for the lease of a major deep sea
block for gas and oil exploration tomorrow..
Were going to sign the agreement with Posco Daewoo on March 14, Abul Mansur Md Faizullah told The Independent.
Both sides had signed an initial agreement on December 7 last year. The primary deal recently received clearance from the law ministry and also from the Cabinet Committee on Economic Affairs, enabling Petrobangla to move forward for the final deal.
Official sources said the South Korean company was selected for the gas block through an unsolicited process under the Prompt Power and Energy Supply (Special) Act, 2010, which means there was no open competitive bidding process for the selection.
Under the contract, Posco Daewoo will explore deep sea block 12 (DS 12). If gas is found in the block, the company will sell 1,000 cubic feet of gas at USD 6.5 per unit.
The South Korean company has already invited tender applications from third parties to conduct a two-dimensional seismic survey in the block. The deadline for submission is February 16.
The contract is the first of its kind in the country, as Posco Daewoo was selected directly under the special Act instead of through the traditional tender procedure, sources said.
The government has decided to bypass the usual bidding rounds and purchase oil and gas drilled by international oil companies (IOCs) in the Bay of Bengal at competitive prices, they added.
Posco Daewoo submitted an expression of interest (EoI) to Petrobangla under the special Act to explore DS 12 with the provision of gas exports, something that has been revived despite being scrapped in 2012.
Under the provision, if fossil fuels are found in the block, the company will make the first offer to Petrobangla to buy a portion of the findings, under the production sharing contract (PSC).
If Petrobangla refuses to buy the fossil fuels, Posco Daewoo will extend the offer to other companies in Bangladesh.
Only if the other companies decline the offer as well then South Korean company has the liberty to sell the fossil fuels to foreign companies.
Posco Daewoo Corporation is currently engaged in exploration activities in a nearby gas block in the maritime area of Myanmar. That is why the company is interested in Bangladeshs deep sea gas block No. 12. The deep sea block 12 is located near the Thalin-1A gas exploration well at Block AD-7 of Myanmar, where the Korean resource developer discovered gas reserves in February this year.
Since Block 12 of Bangladesh has similar geographical features as Block AD-7, energy experts believe there is a good chance that it would contain similar gas reserves.
According to international media reports, Posco Daewoo started commercial production of gas at Myanmars offshore blocks A-1 and A-3 in July 2013 and has also been exploring another natural gas well AD-7 after locating a large gas reservoir in February this year.
