Posco International has withdrawn its decision to relinquish deep sea (DS) block-12, seeking an extension of its contract for another year with a higher 'commercial term'.
The South Korean oil and gas firm has also called the state-run Petrobangla for negotiations to amend the existing provision in the production-sharing contract (PSC) for better fiscal benefit.
"We received a letter from Posco last week about its latest decision to stay back in deep sea hydrocarbon exploration," a senior Petrobangla official told the FE on Sunday.
He said the letter has been sent to the Energy and Mineral Resources Division, or EMRD, under power, energy and mineral resources ministry for a decision.
Sources said a hike in the latest model production-sharing contract (MPSC) for next offshore bidding round might have prompted Posco to relinquish the block in expectation of a higher price.
As per the PSC, Posco would get gas price at $6.50 per mmBtu (million British thermal unit) with a 2.0 per cent annual price escalation from the date of first production.
But the newly adopted MPSC has set gas price at $7.26 per mmBtu with a 1.5 per cent annual price rise from the date of first gas production.
Currently, no oil and gas exploration is being carried out in deep offshore blocks in Bangladesh.
Last November, Posco informed Petrobangla and the EMRD of its intent to relinquish the block for failing to hook any partner for joint exploration.
The Posco-Daewoo Corporation, a joint venture, signed the PSC with Petrobangla in December 2016 under the Speedy Supply of Power and Energy (Special Provisions) Act 2010, bypassing tender.
Posco later acquired Daewoo to become the lone stakeholder of DS block-12.
Before relinquishment of the plan, the Korean company carried out a two-dimensional (2D) seismic survey in 3,580-kilometre area, which is double its committed area for assessment.
It could detect around half a dozen potential spots with hydrocarbon reserves following the 2D survey, said a senior Petrobangla official.
Petrobangla earlier awarded DS-12 along with two other deepwater blocks, DS-16 and DS-21, to a joint venture of US-based ConocoPhillips and Norwegian Statoil under the previous 2012 bidding round.
Both ConocoPhillips and Statoil refused to ink a PSC on 'poor fiscal terms' in the model contract.
DS block-12 is located in depth ranging from 1,000 to 2,000 metres having a size of 3,560 square kilometres.
Bangladesh is trying to promote exploration in the Bay of Bengal to help meet its soaring energy demand.
Its natural gas output is hovering around 3,140 mmcfd, with some 575 mmcfd being regasified imported LNG.
The entire local production comes from onshore gas fields.
