Bangladesh says to sign deals with Conoco, Tullow

DHAKA Oct 1 (Reuters) - Bangladesh will sign deals with U.S.-based ConocoPhillips (COP.N) and Ireland's Tullow Oil (TLW.L) by the middle of this month for exploration of gas in three offshore blocks, a senior energy official said.

"We will complete negotiations with them and sign deals to award those blocks by the second week of October," Tawfiq-e-Elahi Chowdhury, adviser to the minister responsible for power, energy and mineral resources, said on Thursday.

In August the government approved the award of two deepwater 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.

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

"We cannot waste even a day as our natural resources are depleting fast and we want a double-digit growth by the end of 2020 to become a middle income country," said Mohammad Muqtadir Ali, chairman of the state-run Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla.

The foreign firms will invest $160.5 million in exploration in the three approved offshore blocks, Muqtadir told reporters at a news conference.

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

"Bangladesh has also lodged its objection (with those countries) and is trying to establish our rights. The issue will be settled through negotiations," said Mijarul Quayes, secretary of foreign affairs.

Bangladesh is facing gas shortages of 220 million cubic feet (mmcf) a day out of a total daily demand of 2,200 mmcf.

"We (now) have only 7.2 trillion cubic feet (tcf) of proven gas and 5.5 tcf probable gas," Muqtadir said.

To turn the probable gas into proven reserves the country will need huge investment and technical knowhow which it does not currently have, he said.

"If we cannot do that then the country will face tremendous crisis after 2015," Muqtair said.

The demand for gas is rising by up to 10 percent every year.

Bangladesh has 52 licensing blocks of which 24 are onshore and 28 offshore.

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

Petrobangla made the final selections after evaluating offers from companies that included ConcoPhillips, Tullow, Australia's Santos (STO.AX), Longwoods Resources Limited, Korean National Oil Corp, China's CNOOC (0883.HK) and Comtrack Services Limited of Cyprus, said the official.

The offshore bidding round was launched last year by the army-backed interim government but the decision on awarding the blocks was left for the elected government.

Currently, British firm 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 blocks, both onshore and offshore, since gas exploration began in the country in late 1960s.

"The model PSC of 2008 will not allow export even in the form of LNG unless Petrobangla or any third party refuse to buy natural gas," Tawfiq told reporters. (Reporting by Serajul Islam Quadir; Editing by Greg Mahlich)