ONGC Videsh, OIL to explore oil & gas in Bangladesh

NEW DELHI: ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) have signed contracts to explore oil and gas in two areas in Bangladeshi waters.

An equal joint venture of OVL, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), and OIL on Monday signed production sharing contracts (PSC) for shallow water blocks SS-04 and SS-09 in Bangladesh.

“OVL along with OIL formed a consortium (50:50) and participated in the Bangladesh Offshore Bidding Round 2012, launched by Bangladesh Government during December 2012,” the company said in a statement.

The consortium was officially notified as the winner of two shallow water blocks SS-09 and SS-04 on August 20, 2013. “Subsequently, the Production Sharing Contract (PSC) was discussed and initialled on September 19, 2013 and the Government of Bangladesh approved the award of the blocks to OVL/OIL consortium on December 3, 2013,” the statement said. Under the contract signed on Monday, OVL-OIL will spend $103.2 million during the initial exploration of the two blocks.

They will also carry out an indepth seismological survey of the blocks during a five-year initial exploration period which will be followed by a three-year exploration period.OVL-OIL combine will be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field.

Under Bangladeshi law, the two firms cannot sell gas outside the country and must first offer the fuel to national oil firm, Petrobangla.

If Petrobangla does not accept the offer within six months, they can sell it to anyone within Bangladesh.

OVL, which had gone into a shell after its 2008 acquisition of Russia-focused Imperial Energy was criticised, has turned into an aggressive bidder on the international scene during the past yea. In October 2013, it won two onshore blocks —B2 (Zebyutaung-Nandaw) and EP-3 (ThegonShwegu)— in Myanmar.