The government has extended the tenure of Indian oil and gas exploration company ONGC Videsh Ltd's (OVL's) production- sharing contract (PSC) by two more years - offering the firm an opportunity to complete its committed exploration in the Bay.
"We have extended the OVL's PSC tenure in line with the latter's plea, as it 'failed' to carry out the necessary exploration within its previous stipulated timeframe of February 2023," a senior Petrobangla official told the FE on Monday.
He said the state-run Petrobangla has extended the OVL's PSC tenure until February 2025.
This is the third extra period of time that the OVL has got from the Petrobangla.
The Petrobangla earlier extended the company's PSC tenure by two more years until February 2023 to boost offshore exploration.
The Petrobangla signed two PSCs with the OVL, the operator of shallow sea (SS) offshore blocks SS-04 and SS-09, on 17 February 2014, which was set to expire in February 2019 as per the original PSC.
The OVL is contractually pledge-bound to drill two more wells -Titly in block SS-04 and Moitree in block SS-09. But the firm has not yet engaged any contractor for the drilling of Titly and Moitree wells, it has been alleged.
The OVL has a budget of US$65 million to drill the wells, said sources.
It had sought an extension in the fond hope that contractors would demand less drilling costs after months with easing of the current global energy market turmoil, the Petrobangla official added.
But several months back, the Indian firm 'failed' to discover any hydrocarbon presence at Kanchan gas-well under the SS-04 block in Moheshkhali Island. It plugged and abandoned the well subsequently, which means the well does not have any prospect of hydrocarbon reserve.
The OVL drilled beyond its targeted depth of around 4,228 metres beneath the surface in search of a commercially viable gas deposit at Kanchan.
But it could find only huge deposits of clay and shell-stone sequence in absence of sandstone, meaning there is no gas-reserve prospect there.
The Kanchan well was up for the first offshore drilling in the country's maritime territory in five years.
The Australian company Santos along with the Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) in February 2017 drilled Magnama-02 well under block 16 only to find it dry.
The joint venture drilled the offshore well into a depth of around 3,200 metres, which cost the BAPEX an estimated $29 million.
The country has no producing offshore gas well, and its entire natural gas output comes from onshore fields as well as import of liquefied natural gas (LNG).
The OVL is the operator of blocks SS-04 and SS-09, having a participating stake of 45 per cent.
Block SS-04 covers an area of 7,269 square kilometres (sq-km), while block SS-09 stretches over an area of 7,026 sq-km. Water depth of both the blocks ranges between 20 metres and 200 metres.
As per the PSC, the OVL is committed to conduct 2,700 line-kilometre 2D seismic data acquisition and processing as well as drill one exploratory well in block SS-04.
It is also committed to doing the same for another 2,700 line-km 2D seismic data acquisition and processing as well as two exploratory wells in block SS-09.
The OVL will be allowed to operate and sell oil and gas for 20 years from an oil-field and 25 years from a gas-field. It has already completed around 3,100 line-km 2D seismic survey for both the blocks.