Bangladesh signs deep sea exploration deal with South Korean company Posco Daewoo

Bangladesh has signed a production-sharing contract with the South Korean company Posco Daewoo Corporation for the exploration of mineral resources in the deep seas.

The two sides signed the agreement for DS Block-12 on Tuesday at the Petrobangla head office in Dhaka. Deputy Secretary Begum Khadiza Naznin for Energy and Mineral Resources Division, Secretary Ashfaquzzaman for Pertobanngla and Senior Executive Vice-President of Daewoo Si Bo Joo signed the agreement.

The tenders for Block-12, Block-16 and Block-21 were floated on Feb 5, 2016.

Under the agreement, for the produced gas-condensate Bangladesh would get 65 percent to 90 percent after production cost while for the natural gas it would be 60 percent to 85 percent after the cost.

Daewoo is a reputable company in South Korea which started its journey in 1967 as Daewoo Industries. In 1982 it renamed as Daewoo Corporation, and in 2010, it merged with POSCO group to become Posco Daewoo.

The company currently has exploration project in Myanmar.

In the agreement, the initial exploration phase is stipulated at five years which could be extended by another three years.

The contract area is 3,560 sq km in which in first two years the company would conduct a 2D seismic survey in 1000 line kilometre areas while a 3D survey would be carried out in 1000 sq km areas in the 3rd year. Exploratory oil drilling will be conducted in 4th and 5th year.

The company will begin seismic survey later this year and will get some result by 2019.

Based on the marker price, the gas valuation would vary from $100 to $200. It stipulates a 130 percent of the marker price with 2 percent escalation per year from the date of commercial production.

Energy Affairs Adviser to the Prime Minister, Tawfiq-e-Elahi Chowdhury, State Minister for Energy and Mineral Resources Nasrul Hamid, president of parliamentary standing committee on energy and mineral resources ministry Tajul Islam and other government officials were present at the signing ceremony.