The Indian state-owned Oil and Natural Gas Corporation (ONGC) Videsh Ltd and its partner, Oil India Ltd (OIL), will begin seismic survey in Block-SS-4 and SS-9 in the Bay of Bengal from the beginning of February, sources in the state-run Petrobangla said.  The Chinese geophysical service firm, the BGP, will conduct the 2D survey work on behalf of the two Indian companies. As per the provision of the model production sharing contract (PSC), companies chosen for hydrocarbon exploration can engage a third party to conduct the 2D survey.
The two Indian companies signed a contract with the Bangladesh government and Petrobangla to carry out hydrocarbon exploration work in two shallow blocks of the Bay of Bengal on February 17, 2014. The ONGC Videsh Ltd and OIL then floated a tender to engage a third party to carry out exploration work. The Chinese firm had the lowest bid and was thus awarded the job of conducting the 2D survey. Sources in Petrobangla said the survey work will end in March this year. The Energy Division under the Ministry of Power, Energy and Mineral Resources has instructed all the relevant government departments to help the ONGC carry out the survey work. A letter in this regard, signed by Khadiza Naznin, Deputy Secretary of the Energy Division, was issued by the Energy Division to the respective government offices on January 3. Petrobangla, in a separate letter on December 23, informed the Energy Division about the Indian company’s involvement in the exploration work in the two blocks. It was mentioned that the Indian companies were awarded the work to explore hydrocarbon resources in Block-SS-4 and SS-9 on February 17, 2014.
The two Indian companies will invest USD 144.8 million in the two block SS-2,700 km in SS-4 2,850 km of Block SS-9. This is the first time that firms from the neighbouring country have signed offshore drilling deals with Bangladesh. The ONGC and Oil India have offered to invest USD 58.4 million to conduct a 2D seismic survey of 2,700 line-km, a 3D seismic survey of a 200 sq-km area and drill two wells in Block 4. They also offered to invest USD 86.4 million to conduct a 2D survey of 2,850 line-km, a 3D survey of a 300 sq-km area and drill three wells in Block 9. According to the deal, the government’s profit-sharing ratio for the two blocks will be 60-85 per cent for gas and 70-90 per cent for oil. For both blocks, the contract period is eight years, the first five years to be spent on preliminary exploration. The companies are obligated to use a maximum of Bangladeshi working hands, gradually increasing to 50 per cent during the exploration phase and to 90 per cent by the 10th production year. Cost recovery will be a maximum of 55 per cent per year of available petroleum. Cost recovery of expenses and compensation provisions will not be available if the contractors are found to be negligent. The contractors cannot claim compensation if petroleum operations are suspended because of a dispute, according to the deal.