India's oil and gas exploration firm ONGC Videsh Ltd will continue the exploration job in shallow water in the Bay of Bengal, as the 'logging tools' that got stuck during offshore drilling at Kanchan have been cleared.
Its drilling contractor - Chinese Sinopec - will reinitiate Bangladesh's maiden offshore drilling at Kanchan to delineate a new hydrocarbon reserve in the Bay, said sources. The incident involving the logging tools, however, delayed further the much awaited drilling as the Chinese firm crossed the 90-day timeline set between the ONGC and Sinopec to complete the offshore drilling.
The absence of sandstone from the targeted area beneath the sea and huge deposits of clay and shell stone there had made the drilling job "cumbersome", said a senior official of Petrobangla.
The drilling right on Kanchan, located under shallow water Block SS-04, is bestowed on ONGC under a production-sharing contract (PSC) with state-run Petrobangla and the government. The ONGC engaged Sinopec as a contractor to drill the well within 90 days of initiating the work, meaning by December 29, 2021. Sources said the ONGC initially had planned to carry out Kanchan drilling by December 2020.
The onslaught of the Coronavirus pandemic, subsequent lockdown, restricted movement of personnel and equipment, and tax-payment row with the authorities concerned had earlier prolonged the mandatory drilling of the well by the ONGC. The ONGC and its drilling subcontractors are already in payment rows due to the delays, said the sources.
Before the coronavirus onslaught, a dispute over advance income tax (AIT) and demurrage payment on drilling equipment were delaying the drilling of the exploratory well. After resolving the dispute, the Coronavirus issue emerged as a major obstacle to initiating drilling, said the Petrobangla official.
Apart from Kanchan, ONGC will have to drill two more wells - Titly in Block SS-04 and Moitree in Block SS-09 areas - within its contract period up to February 2023. The drilling of the Kanchan well is the first offshore drilling in the country's maritime territory in five years.
Australian oil-and-gas-exploration-company Santos along with state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) earlier in February 2017 drilled offshore Magnama-2 well under Block 16 which was found dry after drilling. The joint venture had drilled the Magnama-2 well to a depth of around 3,200 metres to find it dry. This drilling cost BAPEX around US$29 million.
There are also no producing offshore gas wells in the country and the entire natural gas output comes from the country's onshore gas fields as well as import of liquefied natural gas or LNG. The state-run Petrobangla earlier extended the tenure of contract with ONGC by two more years until February 2023 to boost offshore exploration. The deal with the Indian firm was set to expire in February 2021 after an initial two-year extension.
Petrobangla signed two PSCs with ONGC, the operator of blocks SS-04 and SS-09, on February 17 in 2014, which was set to expire in February 2019. ONGC is the operator of blocks SS-04 and SS-09, having a participating interest of 45 per cent. OIL holds 45 per cent participating interests and the BAPEX holds the remaining 10 per cent.
The Block SS-04 covers an area of 7,269 sq km while the Block SS-09 stretches over an area of 7,026 sq km. Water depth of both the blocks ranges between 20 and 200 metres. As per the PSC, ONGC is committed to conducting 2,700 line-kilometre 2D seismic data-acquisition and -processing and one exploratory well in Block SS-04 and 2,700 line-kilometre 2D seismic data-acquisition and-processing and two exploratory wells in Block SS-09.
The firm will be allowed to operate and sell oil and gas for 20 years from an oil field and 25 years from a gas field. The ONGC has already completed around 3,100 line-kilometre 2D seismic surveys for both the blocks.
