Bangladesh picks ConocoPhillips,Tullow to explore gas

DHAKA Aug 25 (Reuters) - Bangladesh has chosen U.S.-based ConocoPhillips (COP.N) and Ireland's Tullow Oil (TLW.L) from a field of seven bidders and awarded three offshore blocks for the exploration of gas, a senior energy official said on Tuesday.

The companies will be awarded a production sharing contract, with a provision to export their gas in the form of liquefied natural gas, the official said.

"The government approved the leasing out of two deep-water offshore gas blocks to ConocoPhillips and one shallow water block to Tullow for oil and gas exploration in the untapped areas of the Bay of Bengal," said Mohammad Muqtadir Ali, chairman of the state-run Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla.

The oil firms will invest $160.5 million for hydrocarbon exploration in the three approved offshore blocks, he added.

Both firms will avoid exploring sea areas that are in dispute because of overlapping with blocks of neighbouring countries India and Myanmar.

The results of the exploration by the foreign companies might come within four years for the shallow water block and five years for the deep-water blocks, officials said.

"The government is not in favour of awarding more than two blocks to a single company," the Petrobangla chief said.

Petrobangla made the final selections after evaluating offers from companies that included ConcoPhillips, Tullow, Australia's Santos, Longwoods Resources Limited, Korean National Oil Corp, China's CNOOC and Comtrack Services Limited of Cyprus, said the official.

The offshore bidding round was launched last year by the army-backed interim government in the wake of the country's depleting gas reserves. But the decision on awarding the gas blocks was left for the elected government.

Currently, Britain's Cairn Energy's (CNE.L) Sangu gas field is the country's lone operating offshore gas field.

International oil companies have been awarded only 12 hydrocarbon blocks, both onshore and offshore, since gas exploration began in the country in late 1960s.

The government forecast that the country's current gas reserves will run out by 2014-2015 at the present consumption rate.

Bangladesh's proven gas reserves are 7.3 trillion cubic feet (tcf) and the probable reserves are 5.5 tcf. The country is facing up to 250 million cubic feet in shortages of gas each day even as demand is rising. ($1= 69 taka) (Editing by Anis Ahmed)