The cabinet committee on economic affairs on Wednesday approved the Energy and Mineral Division`s proposal to sign the production sharing contract (PSC) with South Korean Posco Daewoo International Corporation for oil and gas exploration in the deep sea block-12.
The cabinet body approved the proposal in a meeting held at Secretariat with Finance Minister Abul Mal Abdul Muhith in the chair.
After the meeting, additional secretary to the cabinet division Mostafizur Rahman told reporters that the government processed the proposal of Posco Daewoo under the ‘Speedy Supply of Power and Energy (Special Provision) Act, 2010’ which means there was no open competitive bidding process in awarding the deal.
On December 7 last year, state-owned Petrobangla signed an initial deal with Posco Daewoo for the deep sea block.
After the cabinet body`s nod, both will move for signing the final deal which will allow Posco Daewoo to start physical works for the block.
According to the proposed contract, Posco Daewoo will conduct a 2D seismic survey and drill an exploration well during the first two years. If the block is found to be potential, then the company will also conduct a 3D seismic survey.
A Petrobangla official said that the government kept option for export in the proposed deal.
After the discovery of any gas, the South Korean company will offer Petrobangla to buy its portion of gas to be obtained under production sharing contract, according to the export provision.
If Petrobangla refuses to buy gas, Posco Daewoo will offer a third party within the country to buy it. If the third party refuses, the Korean company will be allowed to export.
Official sources said the price of gas was set at $ 6.5 per unit (1000 cubic feet) in the proposed deal.