The New Nation - Internet Edition

Staff Reporter

Seven international oil companies (IOCs) yesterday submitted bids showing interest to take part in the offshore oil and gas exploration in Bay of Bengal.

Though Petrobangla invited tenders for 28 offshore blocks in the Bay of Bengal, only 22 bids were submitted for 15 blocks. Seven companies submitted bids proposed to invest US$ 1,248.85 million for the offshore oil and gas exploration.

The seven IOCs of different countries submitted their bids at Petrocentre in the city and the bids were opened before them. The bids were received till 1:00pm and opened at 2:00pm.

Initially, a total of 25 IOCs had purchased the bid documents and it was expected that at least 15 of them, including some oil majors like Chevron and British Petroleum (BP), might submit the offers.

But, finding seven in the final bidding row, industry-insiders termed participation of IOCs 'a poor response' while Petrobangla officials claimed it as 'a satisfactory one.'

The state-owned Petrobangla floated international tenders on February 15 last inviting interested local and foreign oil companies for offshore oil and gas exploration in 28 blocks of the Bay of Bengal.

However, none of the IOCs showed any interest for conducting exploration in 13 deep-sea and shallow-depth water blocks. Majority of the companies submitted bids for exploration in deep-sea blocks rather than shallow-water blocks. Bids were submitted for only three shallow-depth water blocks, while 12 bids were submitted for deep-sea blocks.

Announcing the initial bidding results, Petrobangla Director (PSC) Muktadir Ali said that they would complete the final evaluation in three weeks.

"Detailed evaluation will be done as per the bidding documents," he told the reporters.

Muktadir Ali said, "The bids which we have received today are satisfactory. More than one company submitted bids for exploration in 15, out of 28 blocks."

He said after evaluation of the bids by May 31 next Petrobangla would send them to the Ministry of Energy and Mineral Resources first and later to the Advisory Council for final approval. If the Advisory Council gives approval the bids will then be sent to the Ministry of Law for examination.

"We hope to complete all these tasks by September and sign final contracts with the selected companies by October," he said.

ConocoPhillips, the third-largest integrated energy company in the United States, submitted bids for the maximum number of blocks. They submitted bids for exploration of oil and gas in Block Nos. 10, 11, 12, 15, 16, 17, 20 and 21.

ConocoPhillips, known worldwide for its technological expertise in reservoir management and exploration, 3-D seismic technology, high-grade petroleum coke upgrading and sulfur removal, proposed to invest US$ 442.677 million for exploration in these eight blocks.

Santos International of Australia submitted bids showing interest in exploration of oil and gas in six blocks. These are: Block Nos. 10, 11, 12, 13, 15 and 16. Among these, Santos International submitted bids for Block Nos. 10, 11, 15 and 16 jointly with Cairn Energy plc of the United Kingdom. Santos proposed to invest US$ 852.70 million for exploration of oil and gas in these six blocks.

It also offered to conduct 2D and 3D seismic surveys and drilling in a number of wells for the blocks.

Another American company, Longwood Resources Ltd, submitted bids for exploration of oil and gas in Block Nos. 3, 13 and 18. They proposed to invest US$170 million.

On the other hand, Comtrack Services Ltd of the UK submitted bids for the Block Nos. 9 and 14. It proposed to invest US$61.30 million.

National Oil Corporation of South Korea submitted bid for the Block No. 10 only. However, it did not submit any detail about what work it would do in the block.

Tullow Bangladesh submitted bid for the Block No. 5, while CNOOC of China submitted bid for the Block No. 1. Tullow proposed to invest US$49.85 million, while CNOOC proposed to invest US$115 million.

Earlier, Petrobangla offered these 28 blocks for gas exploration which are located up to 300 kilometers depth in the Bay of Bengal. Of them, eight are located in the shallow-depth water block, called A-type, while the rest 20 blocks are deep-sea blocks called B-type.

The bidding was the first of its kind for the country where the focus was kept exclusively on the Bay of Bengal.

Petrobangla published bid document selling proposal, titled 'Offshore Bidding Round 2008' on February 15 and started selling bid documents from February 24. It also organised a two-day road-show at a city hotel inviting local and foreign companies to encourage the selling of bids. The road show was participated by a total of 76 oil and gas companies including global heavyweights and local companies.

Explaining about the necessity of the present 'Offshore Bidding Round 2008,' sources at the Petrobangla told The New Nation that India has been exploring the Bay heavily in recent years and has discovered 100 trillion cubic feet (tcf) of gas and two billion barrels of oil.

Even Myanmar last year discovered 7 tcf of gas in an offshore area which may be overlapping with Bangladesh's maritime boundary.

"So, why Bangladesh should lag behind, especially at a time when the country is in dire need of gas resource for maintaining its economic growth," the official said.

The first-round bidding was held 1993 while the second round took place in 1998.

Bangladesh is experiencing shortage of about 100 million cubic feet (mmcf) of gas per day against its demand for 1900mmcf. Apart from the official record, there is huge hidden demand for gas from the industrial sector.

Experts believe the demand-supply gap will be widening in the days ahead as there is no possible way to increase the production to meet the growing demand. Industry, power and fertilizer sectors are suffering from gas shortages.

They also believe the country will experience severe energy crisis after 2012. The existing gas reserve, estimated at around 8.0 trillion cubic feet (tcf), would hardly meet the demand up to 2015.

It has been estimated that to meet the energy demand up to 2025, around 24 tcf gas would be required.