The Awami League government is furnishing antistate accords one after another in the power and energy sector. In this process they have signed an oil and gas production sharing charter against two blocks (Block No 10 and 11) in the Bay of Bengal with US Company Conoco Philips on 16 June 2011. Although the concerned people of the country opposed this accord, government has not paid any attention to that. Protesting this anti-state accord the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port has called already hartal (general strike) across the country. In the mean time, allegation has been surfaced for showing special favor to this US Company using the equivocation of words. Energy experts have termed this accord as against the interest of the country. They said due to the accord instead of ensuring energy security of the country the crisis would be accumulated more. Since the reserve would be finished to cover the cost of extraction of only 55 percent gas. Prof Anu Mohammad, member-secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port, strongly criticizing the signing of accord with US Company said in a press briefing that India is extracting gas in one side of the Bay of Bengal while Myanmar is doing it on the other side. The Awami League has handed over whatever was left to the US Company on 16 June last through an accord. He said it is our resource but we are going to get only 20 percent and the US Company will get 80 percent. However, the government is saying that we are going to get 80 percent of the gas. It is totally baseless, he commented. He said that 55 to 80 percent of the profit had been mentioned in the accord. But before that they would take 55 percent for covering their expenditure. Because of the imbalanced nature of the accord we will not be able to see the face of profit ever. Since the reserve of gas would be finished just to cover the cost of extraction. This accord must be scrapped. Because of this imbalanced accord the energy security of the country will not be ensured. Rather it would make our crisis condensed as only the ocean was the major source of our energy security. Due to this imbalanced accord it has been started by handing over two blocks to the US Company. If we fail to resist it then the entire thing will be slipped through our hands.
Cost of Extraction
Presenting the different sides of the accord Professor Anu mohammad also said where a local company can dig well for only BDT 600 million to 700 million ($8.57-10 million) there foreign companies show the cost four to five times more to withdraw the cost of extraction. That means, 3.50 billion takas ($50 million). Scope has been given to withdraw 55 percent of the cost. He thinks for that they would take away 80 percent of the gas showing excess cost. They would used up the reserve of the gas for withdrawing the cost. Such has been done with Sangu gas field. He also said scope of export has been provided in the accord mainly to hand over the Bay of Bengal to foreigners. He said US Company would take away most of the gas that would be extracted from here. What would be left will not be possible to bring in to the coast setting up 280-km-long pipeline.
Almost 20 percent area of the two blocks that has been covered in the accord for exploration of gas is part of the disputed area. Among this India has objection to some part of block no. 10 while Myanmar has objection for a small part of block no 11. Neighboring country India has claimed over 1,164 sq km area of block 10. Among the 3,864 square kilometer area of block 10 2,700 square kilometer is non-disputed. Area of block no 11 is 2,899 sq km. Among this 2,460 square kilometer is free of dispute. The rest 439 square kilometer area is disputed. Myanmar has claimed over this area. In addition, there is claim of neighboring country over most of the areas of block no 5. Both the countries applied to the Arbitration Council of the United Nations for dispute resolution. The issue is waiting to be resolute.
Accord Consists
According to the production sharing charter signed with the US Company guarantee money would be $160 million. This would be used up in three phases. Among these in the first phase $52 million, $58 million in the second phase and $50 million in the third phase would be spent. For block development they have to make 2D survey in 100 square kilometer area. In the first phase geological survey would be done in 973 line kilometer. In the second phase they would perform 3D survey in 500 square kilometer area and in the third phase exploration wells have to be dug in the sea bed to 2200 kilometer.
Term of Accord
The term of the accord would be nine years. It would be for five years at first then the extension of the accord would be made by two years at a time for twice. After the geological survey, according to the condition of the accord, if the US Company does not dig any exploration well then the accord would be null and void after three years.
Location of Block 10 and 11
Location of block 10 and 11 is 280 kilometer from the Chittagong port. Depth water in these two blocks has been fixed one to one and a half kilometer or 3,300 to 5,000 feet. The total area of these two blocks is 5,158 square kilometer including the disputed area with India and Myanmar. Among these the disputed area is 1,605 square kilometer.
Due of Bangladesh
US Company will get the highest 55 percent of the gas of the total explored gas as for charge of the cost of exploring gas if gas or oil is found in any of the blocks. Bangladesh will get minimum 60 percent to highest 85 percent of the gas out of the rest of 45 percent. And Bangladesh will get minimum 55 percent to highest 80 percent of the natural gas.
Condition of Export of Gas
Scope of exporting gas has been included in the accord. But in that case the Petrobangla has to be notified first. If Petrobangla does not respond within six months then they would look for some other excluding Petrobangla for selling gas within Bangladesh. If Petrobangla rejects then they would sell gas to third party within Bangladesh. If the third party is not found for selling gas then they would be able to export gas to abroad. But in that case the gas has to be transformed into LNG (Liquid Natural Gas). According to the international market value of the gas, Bangladesh has to pay that. Before exporting LNG permission of the Petrobangla is to be required.
Income Tax has to be borne by the Company
According to the accord, the US Company has to bear all the income taxes. In that case if the US Company signs agreements with other company then the tax would be borne by them including the income tax of all officers and employees of the company.
Allegation of Granting Special Favor to US Company Using Equivocation of Words
Energy experts have said that in the signed accord with US Company Conoco Philips more scope of protecting the interests has been given than the Model PSC 2008 where the scope of protecting the interests of foreigners was provided. Using the equivocation of words special favor has been made to this US Company. This not only hampered the interest of the country but also scope of giving ownership of most of the extracted gas from the seabed has been given to Conoco Philips.
An official of Petrobangla claimed anonymity said when the tender for exploring oil and gas in the deep sea has been invited on 15 February of 2008 then seven companies participated. Evaluation Committee recommended to award block 10, 11, 12, 15, 16, 17, 21 and 29 (total eight blocks) to US Company Conoco Philips. But due to conflict with India and Myanmar with maritime border later in the meeting of ECNEC on 24 August of 2009 permission to sign PSC for exploration in block 10 and 11 was given. US Company Conoco Philips participated in the tender following all the condition s of the tender. But later special favor had been provided to this US Company in several regards. Even the objection of the law ministry raised during the vetting of law ministry for verifying the draft of the accord has not been followed.
That responsible official of Petrobangla said there was condition in the Model PSC that for dispute it would be resolute in the court of Dhaka following the conventional laws of Bangladesh. But changing that, it has been said that if the contractor does not agree about Singapore then the arbitration would be held in Dhaka. That means, it entirely depends on the US Company. They do not agree about Singapore then it would be held in Dhaka. As a result, if any such major accident like Niko occurs then the resolution of that would be held in Singapore instead of Dhaka.
In the meantime, in the Model PSC sole authority was given to Petrobangla to determine the quantity point for gas. But changing that, it has been said that it would lie where the development plan would held. At the same time it was said that the contractor will be liable to pay compensation if any accident occurs due to inefficiency. But dropping the term inefficiency it is said that they would held responsible for the accident if it occurs due to negligence.
It is known, objection has been raised from the Law Ministry about this during the vetting. But the accord has been signed accepting that. According to that if any accident happens then it would be difficult to get compensation. Because they would say that they have not done anything that can be termed as negligence. Accident has been occurred because of inefficiency.
However, the government has to install pipeline to bring gas. But if the authority of determining the quantity point was given to Petrobangla then they would be liable to send gas to that point where Petrobangla would fix it.
According to the energy experts, it is rare to provide such special favor to a foreign company dropping a word. Because, on one hand, scope of export has been given and on the other hand, Bangladesh has been deprived of rational share. According to them, we will only get 20 percent of the gas reserve and the rest would be obtained by the US Company. The 20 percent that we will get will not be able to bring to the coast. Since the cost of bringing that 20 percent gas is higher than the import cost of such amount of gas.
Cost of Extraction
Presenting the different sides of the accord Professor Anu mohammad also said where a local company can dig well for only BDT 600 million to 700 million ($8.57-10 million) there foreign companies show the cost four to five times more to withdraw the cost of extraction. That means, 3.50 billion takas ($50 million). Scope has been given to withdraw 55 percent of the cost. He thinks for that they would take away 80 percent of the gas showing excess cost. They would used up the reserve of the gas for withdrawing the cost. Such has been done with Sangu gas field. He also said scope of export has been provided in the accord mainly to hand over the Bay of Bengal to foreigners. He said US Company would take away most of the gas that would be extracted from here. What would be left will not be possible to bring in to the coast setting up 280-km-long pipeline.
Almost 20 percent area of the two blocks that has been covered in the accord for exploration of gas is part of the disputed area. Among this India has objection to some part of block no. 10 while Myanmar has objection for a small part of block no 11. Neighboring country India has claimed over 1,164 sq km area of block 10. Among the 3,864 square kilometer area of block 10 2,700 square kilometer is non-disputed. Area of block no 11 is 2,899 sq km. Among this 2,460 square kilometer is free of dispute. The rest 439 square kilometer area is disputed. Myanmar has claimed over this area. In addition, there is claim of neighboring country over most of the areas of block no 5. Both the countries applied to the Arbitration Council of the United Nations for dispute resolution. The issue is waiting to be resolute.
Accord Consists
According to the production sharing charter signed with the US Company guarantee money would be $160 million. This would be used up in three phases. Among these in the first phase $52 million, $58 million in the second phase and $50 million in the third phase would be spent. For block development they have to make 2D survey in 100 square kilometer area. In the first phase geological survey would be done in 973 line kilometer. In the second phase they would perform 3D survey in 500 square kilometer area and in the third phase exploration wells have to be dug in the sea bed to 2200 kilometer.
Term of Accord
The term of the accord would be nine years. It would be for five years at first then the extension of the accord would be made by two years at a time for twice. After the geological survey, according to the condition of the accord, if the US Company does not dig any exploration well then the accord would be null and void after three years.
Location of Block 10 and 11
Location of block 10 and 11 is 280 kilometer from the Chittagong port. Depth water in these two blocks has been fixed one to one and a half kilometer or 3,300 to 5,000 feet. The total area of these two blocks is 5,158 square kilometer including the disputed area with India and Myanmar. Among these the disputed area is 1,605 square kilometer.
Due of Bangladesh
US Company will get the highest 55 percent of the gas of the total explored gas as for charge of the cost of exploring gas if gas or oil is found in any of the blocks. Bangladesh will get minimum 60 percent to highest 85 percent of the gas out of the rest of 45 percent. And Bangladesh will get minimum 55 percent to highest 80 percent of the natural gas.
Condition of Export of Gas
Scope of exporting gas has been included in the accord. But in that case the Petrobangla has to be notified first. If Petrobangla does not respond within six months then they would look for some other excluding Petrobangla for selling gas within Bangladesh. If Petrobangla rejects then they would sell gas to third party within Bangladesh. If the third party is not found for selling gas then they would be able to export gas to abroad. But in that case the gas has to be transformed into LNG (Liquid Natural Gas). According to the international market value of the gas, Bangladesh has to pay that. Before exporting LNG permission of the Petrobangla is to be required.
Income Tax has to be borne by the Company
According to the accord, the US Company has to bear all the income taxes. In that case if the US Company signs agreements with other company then the tax would be borne by them including the income tax of all officers and employees of the company.
Allegation of Granting Special Favor to US Company Using Equivocation of Words
Energy experts have said that in the signed accord with US Company Conoco Philips more scope of protecting the interests has been given than the Model PSC 2008 where the scope of protecting the interests of foreigners was provided. Using the equivocation of words special favor has been made to this US Company. This not only hampered the interest of the country but also scope of giving ownership of most of the extracted gas from the seabed has been given to Conoco Philips.
An official of Petrobangla claimed anonymity said when the tender for exploring oil and gas in the deep sea has been invited on 15 February of 2008 then seven companies participated. Evaluation Committee recommended to award block 10, 11, 12, 15, 16, 17, 21 and 29 (total eight blocks) to US Company Conoco Philips. But due to conflict with India and Myanmar with maritime border later in the meeting of ECNEC on 24 August of 2009 permission to sign PSC for exploration in block 10 and 11 was given. US Company Conoco Philips participated in the tender following all the condition s of the tender. But later special favor had been provided to this US Company in several regards. Even the objection of the law ministry raised during the vetting of law ministry for verifying the draft of the accord has not been followed.
That responsible official of Petrobangla said there was condition in the Model PSC that for dispute it would be resolute in the court of Dhaka following the conventional laws of Bangladesh. But changing that, it has been said that if the contractor does not agree about Singapore then the arbitration would be held in Dhaka. That means, it entirely depends on the US Company. They do not agree about Singapore then it would be held in Dhaka. As a result, if any such major accident like Niko occurs then the resolution of that would be held in Singapore instead of Dhaka.
In the meantime, in the Model PSC sole authority was given to Petrobangla to determine the quantity point for gas. But changing that, it has been said that it would lie where the development plan would held. At the same time it was said that the contractor will be liable to pay compensation if any accident occurs due to inefficiency. But dropping the term inefficiency it is said that they would held responsible for the accident if it occurs due to negligence.
It is known, objection has been raised from the Law Ministry about this during the vetting. But the accord has been signed accepting that. According to that if any accident happens then it would be difficult to get compensation. Because they would say that they have not done anything that can be termed as negligence. Accident has been occurred because of inefficiency.
However, the government has to install pipeline to bring gas. But if the authority of determining the quantity point was given to Petrobangla then they would be liable to send gas to that point where Petrobangla would fix it.
According to the energy experts, it is rare to provide such special favor to a foreign company dropping a word. Because, on one hand, scope of export has been given and on the other hand, Bangladesh has been deprived of rational share. According to them, we will only get 20 percent of the gas reserve and the rest would be obtained by the US Company. The 20 percent that we will get will not be able to bring to the coast. Since the cost of bringing that 20 percent gas is higher than the import cost of such amount of gas.
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