A ruling by the Permanent Court of Arbitration in The Hague on 7 July 2014 has delineated the maritime border between India and Bangladesh, with Bangladesh winning 19,467 km2 of the 25,602 km2 of disputed maritime area. This ruling means Bangladesh has finally, after 35 years of inconclusive negotiations, legally established its maritime boundaries, a separate maritime dispute with Myanmar having been settled in 2012. The peaceful settlement of the Bangladesh-India border dispute is a positive step forward in the broader context of gradually improving relations between the two countries and increasing energy interdependence.
Bangladesh. (Source: Rei-artur)
New Round Coming Up
Following the ruling, which is binding on both parties, the chairman of state-owned Petrobangla, Hossain Monsur, indicated that Bangladesh will launch a new round of offshore oil and gas tenders in the Bay of Bengal in the near future; ten blocks are expected to be offered.
However, the removal of uncertainty over maritime sovereignty will not of itself be sufficient to attract international investment in exploring the Bay of Bengal, as was amply demonstrated in Bangladesh’s lacklustre 2012 offshore bidding round.
Various aspects of the offshore model PSC came to light when ConocoPhillips identified a large deep-sea oil and gas prospect in Block 11, but could not proceed towards drilling as it felt that the financial risk was too high. Learning a lesson from poor response to the two previous offshore oil and gas bid rounds in 2008 and 2012, the government is set to revise its model production sharing contract with better incentives. In addition, the government will shortly tender for a contractor to conduct a seismic survey in early 2015 in the Bay covering 10,000 line-kilometres in both deep and shallow waters to stimulate bidders’ interest. At present, Bangladesh has no data about offshore prospects to attract oil companies, and the planned survey, estimated to be completed within eight months, would generate data to be available to interested bidders in an offshore bid round scheduled for 2016.
Bangladesh had a single producing field in the Bay of Bengal, the Sangu Field operated by Cairn Energy (Capricorn Energy), a subsidiary of Santos International, but operations were shut down due to lack of production in October 2013. Consequently the offshore remains a vastly under explored arena, with only 17 new field wildcats in an area covering 63,000 km2. Cairn drilled two multi-Tcf prospects (Magnama 3.5 Tcf, Hatia 1.0 Tcf) near the Sangu Field in late 2007/ early 2008, but both were disappointing and require further appraisal. Magnama 1 encountered a number of thin, normally pressured gas bearing sands (20-40m) which may thicken on the flanks of the structure, while Hatia 1 found non- commercial volumes of hydrocarbons and was suspended pending possible re-entry after evaluating the up-dip potential.
Currently there is too little geological data on Bangladesh deepwater blocks to make a prediction on prospectivity or likely resources. Nevertheless, recent big gas discoveries off the Arakan coast of Myanmar are just about 100 km south of St Martin’s Island in Bangladesh and these, along with those on the Indian side, have raised the interest of gas explorers to venture out into the Bay of Bengal. Only intensive exploration by companies with high-tech high-cost capabilities can actually offer a definitive answer.
