* Petrobangla to get 24.75–36pc of gas and 27–38.25pc of oil or condensate
* Conditional provision for export of 80pc of gas as LNG
* Contract to be terminated if exploration well drilling not committed in three years after geophysical survey
* Surveys to be completed in three phases in nine years
* Corporate income tax, income tax of sub-contractors, income tax of employees of contractor and sub-contractor to be paid by the contractor
Staff Correspondent
State-run oil, gas and mineral resources corporation Petrobangla on Thursday signed production sharing contracts with US oil company ConocoPhillips for oil and gas exploration in deep sea hydrocarbon block 10 and 11 amid protests from experts, civic forums and political organisations.
ConocoPhillips will conduct seismic surveys in 5,158 square kilometres of the Bay of Bengal, an area 280 kilometres off the Chittagong port covering the two hydrocarbon blocks, in three phases in nine years.
ConocoPhillips vice-president William G Lafferrandre said that they would start exploration activities in the next winter.
The contract will be terminated after three years if the US company does not commit drilling an exploration well after the geophysical survey in each of the blocks.
The company will get 55 per cent of the available petroleum (gas and condensate or oil) each year in cost recovery. It will also get its stake from condensate or oil and gas in profit share.
Petrobangla will get 24.75–36 per cent of the total recoverable natural gas and 27–38.25 per cent of the total condensate or oil.
Both Petrobangla and ConocoPhillips agreed to exclude an area of 1,605 square kilometres from block 10 and 11 temporarily as the ownership claim dispute of the area, involving India and Myanmar, is pending with the International Tribunal for the Laws of the Seas.
Energy expert Nurul Islam, who is also a professor in Bangladesh University of Engineering and Technology, expressed his concerns that the country might be deprived of using the gas extracted by way of the deal.
He said that there were provisions in the model PSC 2008 that might encourage gas export in the form of liquefied natural gas from the two hydrocarbon blocks.
Government policymakers and Petrobangla officials in the signing ceremony, however, told reporters that the model PSC also had provisions by way of which the US company would need to obtain permission of Petrobangla to export the gas in the form of liquefied natural gas.
According to Article 15.5.4 of the model PSC 2008, Petrobangla can retain only 20 per cent of the total marketable natural gas for the first 10 years if allows the US company to export the gas in the form of liquefied natural gas.
The rest of the gas might be exported in the form of liquefied natural gas and Petrobangla will get paid for its share.
As for government statement on conditions in the PSC, experts and activists said that the energy ministry and Petrobangla had given similar permissions in the past and had given international oil companies many facilities ignoring national interest.
Petrobangla allowed Cairn Energy to sell its portion of the total recoverable gas from hydrocarbon block 16 directly to the private sector at a negotiated price.
Referring to the national export policy, Nurul also said that the policy had an article which would allow international oil companies to export their shares of the natural gas in the form of liquefied natural gas.
'And the policy does not make it mandatory for the international oil companies to seek permission of Petrobangla or the energy ministry to do so,' he added.
Asked why the government is keeping the controversial provision that allows contractors to export gas, the policymakers and the officials could not give any clear answer.
The policymakers also said that the deal with ConocoPhillips would protect Bangladesh's resources in the Bay and ensure its long-term energy security.
The finance minister, Abul Maal Abdul Muhith, said that the deal would not only safeguard the interest of the country but also will do more than that. 'It will protect our resources in the sea,' he added.
The Petrobangla chairman, Hossain Monsur, said that two neighbours of Bangladesh had already started drilling for oil and gas exploration and extraction in the Bay.
He said that India was coming from the west and Myanmar from the east to claim the resources in the Bay of Bengal. 'So we must take serious initiatives to claim and protect our resources there,' he said.
The prime minister's energy adviser Tawfiq E Elahi Chowdhury said that the deal was part of the government's overall strategy for long-term energy security.
'We will initiate oil and gas exploration and extraction in the Bay more vigorously as the country's gas reserves are depleting,' he said.
Asked how the country will get its share of the gas extracted, Tawfiq said that it was not a big deal to set up a pipeline to feed the gas into the national grid.
The Petrobangla secretary, Imam Hossain, and the energy ministry's deputy secretary AKM Mohiuddin Ahmed signed the agreement with ConocoPhillips vice-president William G Lafferrandre for the exploration in block 10 and 11.
The cabinet committee on economic affairs on May 23 approved the proposal for the signing of the production sharing contracts with ConocoPhillips.
ConocoPhillips won exploration rights to eight deep-sea hydrocarbon blocks — 10, 11, 12, 15, 16, 17, 20 and 21 — during the country's bidding round 2008.
source:NewAge
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