DHAKA, Bangladesh (AP) — Bangladesh has signed a production-sharing contract with American energy giant ConocoPhillips to explore for gas in the virtually unexplored deep waters of the Bay of Bengal, officials said Thursday.
The deal is the Houston, Texas-based company's first investment in Bangladesh, a growing economy that is struggling to meet growing demand for gas for its industries.
The nation is seeking new sources of gas amid a forecast that its current reserves will run out by 2014-15. It is facing up to 250 million cubic feet in shortages of gas each day.
Currently, Sangu gas field, operated by Australia's Santos, is the country's lone operating offshore gas field.
ConocoPhillips says it wants to start exploring two areas covering 1,992 square miles (5,158 square kilometers) as soon as possible, and it needs to conduct seismic surveys in two blocks with water depth of 1 to 1.5 kilometers (.6 miles to .9 miles).
Company Senior Vice President Larry Archibald said his firm is looking at a "long and successful" relationship with Bangladesh in the gas sector.
"ConocoPhillips is pleased to become part of the Bangladesh oil and gas community," Archibald said.
A local group is protesting against the deal.
The National Committee on Protection of Oil, Gas and Mineral Resources, Power and Ports says the government is allowing in a foreign company in a way that will hurt the country's interests in the sector.
The government says some people are misinterpreting clauses in the deal.
Government officials also say the sea area available for such exploration will expand once disputes are resolved over boundaries in the Bay of Bengal.
The current deal with ConocoPhillips does not involve disputed waters, but Bangladesh has petitioned to the United Nations to establish its rights over some waters also claimed by India and Myanmar.
In 2008, Myanmar escorted a South Korean gas exploration company into waters also claimed by Bangladesh. Both countries deployed their navies and finally ended the standoff with high-level diplomacy.
Bangladesh has proven natural gas reserves of up to 15 trillion cubic feet.
U.S. energy giant Chevron is engaged in Bangladesh's onshore gas fields supplying about 50 percent of gas to the national gas line.
Foreign companies have invested millions of dollars to explore and produce gas in deals with the state-run Petrobangla.