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Block 7 goes to Unocal, BAPEX partner |
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News |
April 3, 2000
The government yesterday awarded Block 7 to US oil giant Unocal for mining gas with national exploration company BAPEX, reports UNB.
Unocal Bangladesh Limited became the first among 22 companies that took part in the second-round bidding for gas block distribution in 1997 to enter the long awaited production-sharing contract (PSC).
Bangladesh Oil, Gas and Mineral Corporation (Petrobangla), its subsidiary Bangladesh petroleum Exploration Company Limited (BAPEX) and Unocal Bangladesh Limited signed and agreement at the Petrobangla headquarters yesterday.
This is for the first time that BAPEX became partner in gas exploration with an international oil company.
Block 7 is located in the southwestern region, west of the existing Shahbazpur Gas field.
Negotiations are in progress for signing more PSCs with other companies that took part in the first-ever formal international bidding. Earlier, there was no formal bidding and international oil companies were awarded eight gas blocks on selection basis.
As per the agreement signed on the basis of a model PSC, BAPEX will get 10 percent carried interest without any capital investment, a unique condition that is absent from the PSCs signed in the first round in early '90s.
It provides Unocal Bangladesh Limited, a subsidiary of US-based Unocal Corporation, with terms and conditions for conducting exploratory drilling within five years from the signing of the PSC, a shift from the bidding document that allows three years for the works.
Petrobangla secretary Imdadul Huq, BAPEX secretary Safiur Rahman and Unocal managing director Terry Budden signed the deal.
Deputy secretary of the energy division of the ministry of power, energy and mineral resources Khaleda Anwar signed the deal on behalf of the government.
Chairman of the parliamentary standing committee on energy ministry Abul Hasan Abdullah, state minister for energy Rafiqul Islam, energy secretary Dr Toufiq-E-Elhahi Chowdhury and BAPEX witnessed the signing ceremony.
After prolonged negotiations, Petrobangla hurriedly initiated PSCs with Pangea, Unocal and Tullow-Chevron-Texaco in March ahead of US President Bill Clinton's visit on March ahead of US President Bill Clinton's visit on March 20. At least one PSC was supposed to be signed during his stay. But no PSCs was signed.
Unocal was among the 22 companies that took part in the second-round bidding in 1997 for 15 gas blocks. Petrobangla received 37 proposals for appraisal and exploration works in the 12 blocks, excepting three blocks (Block 1, 2 and 23) where no company did show any interest.
Negotiations with the companies lingered over two years apparently because of the politically sensitive issue of gas export which multinational bidders strongly advocate for ensuring a side market base for quick returns on their investments.
Strong political opposition against gas export put both the government and major political parties in the same stance: gas will be exported only after having a reserve to meet domestic consumption for 50 years.
The issue of gas export also figured in the official talks between Prime Minister Sheikh Hasina and US President Bill Clinton where the Prime Minister also cleared her government's position on the issue.
Unocal Bangladesh chief Terry said they would carry out exploration with BAPEX, which will help reduce production costs and help transfer of technology to the mutual benefit.
Unocal proposes to develop WRIP
Meanwhile, Unocal proposed developing the Western region Integrated Project (WRIP) that includes construction of a gas pipeline from Bhola to Khulna and generation of 350 MW power from three plants.
The government renewed the letter of intent with the US company for the WRIP development recently, with BAPEX as Unocal's proposed partner in Shahbazpur Gas Field.
Unocal expects to supply gas to western region from the Shahbazpur Gas Field, which may contain more than 400 BCF (billion cubic feet) of recoverable natural gas.
Unocal and BAPEX would utilize project financing to fund development of the project.
Source: The Daily Star
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