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Download PDF India and Myanmar have raised objections about oil and gas exploration in several blocks bordering their maritime boundary, which may slow down Petrobangla’s bid to find hydrocarbon resources offshore.
Petrobangla and the foreign ministry sources said recently India has categorically objected against exploration in eight offshore blocks close to Indian maritime border while earlier this year Myanmar generally objected to exploration in the bidding area close to its maritime border.
Petrobangla evaluated offers of seven oil companies under the off-shore block bid that was closed on May 7 and was expected to submit the evaluation report today to the energy ministry.
However, Petrobangla could not do it as the foreign ministry had not given any clearance about the off-shore blocks and also because its legal adviser Dr Kamal Hossain and Associates did not submit legal opinion concerning the bid. On top of it, the oil companies yesterday drew Petrobangla’s attention at India’s objection.
Nevertheless, Petrobangla and the foreign ministry believe these would not totally stagnate the bidding process.
“Fixing maritime borders like these take time to finalise. It cannot be done overnight. Differences of opinion concerning our maritime boundary may exist. There is a certain formula that has to be applied. Then we negotiate with neighbouring countries and strike an agreement,” said a foreign ministry high official.
“But we do not think that it would stop the bidding process. There might be disputes and objections about a few blocks but we can go ahead with the rest,” he said.
International laws allow each country to enjoy the rights of 200 nautical miles to the sea from its coast. However, this is a tricky matter as the coasts of India, Bangladesh and Myanmar follow a curve, overlapping maritime territory. As per international practices, in such a case the neighbours should inform each other and reach a mutual understanding in respect of such grey areas.
In the recent past, both India and Myanmar awarded different companies offshore blocks close to the Bangladesh maritime border. During the process, neither India nor Myanmar informed Bangladesh about their initiatives in the Bay.
Bangladesh followed the same norm.
In 2004, the foreign ministry formed a committee with members of Petrobangla, Geological Survey of Bangladesh, Bangladesh Navy, Bangladesh Space Research and Remote Sensing Organization (Spaarso), Bangladesh Inland Water Transport Authority and Surveyor of Bangladesh.
The purpose of this committee was to recommend how to mark the deep sea territory fulfilling requirements of the United Nations and as per the law of the sea. However, the committee became dysfunctional within a year as its foreign ministry members were busy making trips abroad. Last year, the foreign ministry again revived the committee’s activities to mark the deep sea territory.
In January and March this year, the foreign ministry held meetings with Myanmar over the maritime border. Further meetings have been deferred due to cyclone Nargis striking Myanmar.
“We believe we will not have difficulties in reaching an understanding with India. We have exchanged notes but we have not sat for discussion on the matter recently,” he noted adding that prior to floating the offshore bid earlier this year, the foreign ministry gave Petrobangla a go-ahead.
Petrobangla sources said India recently conveyed its objections in letters sent to oil and gas companies that submitted bids in the offshore blocks. The oil companies forwarded these letters to Petrobangla seeking explanation.
Petrobangla’s offshore bid had received lukewarm response due to the government’s minimal efforts to publicise the bid, bad timing and also allegedly negative campaign against the bid by a number of oil companies.
On May 7, seven oil and gas companies submitted their bids in 15 offshore blocks out of the total 28. With some offers overlapping different blocks, the oil companies proposed to invest $1.6 billion. Each block has an exploration area between 3,000 square kilometres (sqkm) and 7,000 sqkm.
Petrobangla sources said out of these bidders, four to five bidders have not qualified in the evaluation. The sources, however, did not disclose names of the qualified or disqualified bidders.
Australian oil company Santos International appeared as the top bidder, making an investment proposal totalling $852 million under three Production Sharing Contracts (PSCs) for six blocks. Santos has joint venture partnership with British company Cairn and Chinese-US joint venture Longwood Resources and Shanghai Zhongman Petroleum (LR & SZP).
Santos faced stiff competition from US oil company ConocoPhillips that submitted offers in common blocks. ConocoPhillips offered to invest $442.63 million under four PSCs in eight blocks.
Chinese-US joint venture Longwoods Resources Ltd, in joint venture with LR & SZP, proposed to invest $170 million in three blocks.
Cypriot oil company Comtrack Services offered to invest $61 million in two blocks under one PSC, Irish company Tullow Bangladesh $50 million in one shallow water block and Chinese oil giant CNOOC $115 million in one shallow water block.
A seventh company, Korea National Oil Corporation of South Korea, submitted, a bid for a block along with a bank-guarantee proposal of $2.5 million without making any investment commitment.
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