Bangladesh government needs to make a decision on awarding of the offshore blocks as soon as possible. Otherwise the energy security of the country will be hampered to a great extend and this AL government will bear the consequences of this as BNP did before.
www.thefinancialexpress-bd.com/2009/05/31/68298.html

Search for oil and gas in the Bay of Bengal has hit a snag due to indecision of the government in

awarding offshore blocks to foreign companies, officials and company sources said Saturday.

On the other hand, the gas output from existing offshore blocks is also falling sharply posing a threat to the country's future energy security.

The country has now only one active production-sharing contract (PSC) on block 16 for oil and gas exploration in offshore though the number was five until February 2009. At least four overseas companies have since left Bangladesh's offshore blocks over poor gas reserves.

The efficacy of the lone operational PSC too will not last long as gas output from the country's only offshore gas field Sangu is waning.

Sangu's operator UK's Cairn Energy and its Australian partner Santos have sought approval on sale of output from Magnama and Hatiya structures, located under the same block where Sangu exists, to a third party other than Petrobangla,.

The companies might relinquish the structures if their demand is not met.

Sources said the government has been sitting on a decision taken by the caretaker government to award nine offshore blocks to two international oil companies for almost a year.

The US oil and gas giant ConocoPhilips was selected for eight offshore blocks and Irish Tullow for one block under the country's latest bidding round in February 2008.

Both the companies have sought to know the government position about awarding of the gas blocks.

Bangladesh has not signed any PSC for offshore hydrocarbon exploration over the past decade whereas its neighbours India and Myanmar awarded offshore blocks in the Bay of Bengal and discovered large natural gas reserves.

India has completed two bidding rounds offering offshore blocks including those in the Bay of Bengal in last five years under its new exploration licensing policy (NELP).

The country has recently launched yet another bidding round that includes offshore hydrocarbon blocks around Andaman islands.

Myanmar too has completed offshore bidding rounds twice in last five years.

Currently, Bangladesh's gas output is hovering around 1920 million cubic feet per day (mmcfd) against the demand for over 2150 mmcfd, Petrobangla officials said.

The country's offshore block is now contributing only 3.0 per cent of the total output amounting to around 55 mmcfd, while the remaining 97 per cent is being produced from the onshore blocks,

Offshore block's contribution was as high as around 180 mmcfd, nearly 15 per cent of the total gas output, a couple of years ago.

Until February 2009, the country had a total of five offshore blocks including the one now producing gas and four others - block numbers 5, 10, 17 and 18, 16.

But operators and partners of offshore blocks 5, 10, 17 and 18, 16 relinquished all the blocks in the period between February and April 2009, citing poor seismic results.

But energy experts said these blocks have gas reserves, but the IOCs have left all these blocks as those are not commercially viable under the current gas pricing mechanism.

Cairn and its partner Santos have given up blocks 5 and 10 in February 2009, while French oil giant Total and its partners Irish Tullow, Thai PTTEP and US Oakland-Rexwood surrendered rights over blocks 17 and 18 in April 2009.

These came as a blow to the country's quest for oil and gas discovery.

When contacted the Prime Minister's Adviser on energy issues Dr Tawfiq -e-Elahi Chowdhury said the government will consider with due diligence the awarding of the offshore blocks to Conocophilips and Tullow, selected through the last year's bidding round.The government is working on it, he added.

Petrobangla acting chairman M Muqtadir Ali said operators and their partners of block numbers 5, 10, 17 and 18, have left as they did not find those blocks economically viable.

He said the bid evaluation committee selected Conocophilips and Tullow for nine offshore blocks last year.

The Petrobangla chairman, however, stressed the necessity for oil and gas hunt to ensure the country's future energy security.