US oil company ConocoPhillips has begun preliminary work to carry out exploration in Bangladesh’s offshore gas field in October this year, Reuters reported Saturday quoting a senior energy official.
Bangladesh approved on May 23 a plan by the firm to explore for oil and gas in two deep sea blocks in the coming winter.
“We are happy that the international oil firm is to begin its work on time as we are deeply short of natural gas,” Mohammad Hussain Monsur, chairman of the state-run Bangladesh Oil, Gas and Mineral Corporation or Petrobangla, told Reuters.
He said the US firm had already started an environment impact assessment survey.
Bangladesh faces acute gas shortages, with production at around 2,000 million cubic feet (mmcft) per day against demand of more than 2,500 mmcft a day.
It has proven gas reserves of 7.3 trillion cubic feet (tcf) and probable reserves of 5.5 tcf.
ConocoPhillips signed a production sharing contract (PSC) with Petrobangla on June 16 this year, under which the U.S. firm has a total of nine years to carry out exploration work.
It has provided a $52 million guarantee for an initial exploration period of five year, $58 million for a first extension of two years and $50 million for a second 2-year extension period.
It will not be able to undertake any exploration work in disputed areas in the blocks until Bangladesh resolves its maritime boundary spats with neighbours, India and Myanmar.
According to the PSC, ConocoPhillips will not be able to export gas from the two deep water blocks by pipeline, but in liquefied natural gas (LNG) form, and only if Petrobangla and any third-party domestic user refuses to buy it.
The share of profit for Petrobangla under the PSC is a minimum of 55 percent running up to a maximum of 80 percent for natural gas and a minimum of 60 percent with a maximum up to 85 percent for oil or condensate.