Bangladesh to invite bids for onshore gas blocks

DHAKA Oct 14 (Reuters) - Bangladesh, facing acute shortage of natural gas and with reserves depleting fast, will soon call for international bids to explore its onshore gas blocks, a senior energy official said on Wednesday.

"We have already begun the process to invite the bidding for onshore gas blocks," said Mohammad Mohsin, government secretary of energy and mineral resources division.

He said the scarcity of gas deprived many new industries, mostly in the manufacturing sector, of gas supply.

Bangladesh faces a gas shortage up to 250 million cubic feet daily, but can not go for new international bidding on onshore blocks for legal constraints.

The High Court ad imposed a ban on onshore bidding, which the government is trying to overcome, Mohsin told reporters.

In 2007, the Hig Court withdrew a similar ban on offshore gas biddings by international companies, following a move by then army-backed interim administration.

"We strongly hope the legal constraints on onshore bidding would be removed and we will be able to call international bidding as soon as possible," Mohsin said.

The first international bidding for hydrocarbon exploration was held in 1993 after the onshore and offshore areas were divided into 23 blocks.

In the first bidding, 8 blocks were awarded to different international oil companies (IOCs) which include Occidental (OXY.N), Cairn Energy (CNE.L), Oakland, Rexwood and United Meridien.

A second round of production shareing contracts (PSC) was held in 1997 when a number of IOCs like Tullow (TLW.L), Chevron, Texaco, Royal Dutch Shell (RDSa.L) and Cairn won.

In the third international bidding held in February 2008, the offshore areas were divided into 28 new blocks, including eight blocks into shallow water and 20 in deep in the Bay of Bengal.

In the third round bidding seven IOCs submitted 15 bids but the government accepted three, for which final deals are now being prepared.

The government has decided to award the three deals to two IOCs, the US-based ConocoPhillips (COP.N) and Irish company Tullow.

Bangladesh has now only 7.2 trillion cubic feet (tcf) of proven gas and 5.5 tcf probable gas.

(Reporting by Serajul Islam Quadir; Editing by Anis Ahmed)