Partners in Block SS-11 offshore Bangladesh have formally relinquished the shallow-water tract, dealing another blow to the South Asian nation’s increasingly lacklustre upstream sector.

Co-venturer KrisEnergy revealed on Monday that Bangladeshi authorities last week approved the relinquishment of the area in the Bay of Bengal and termination of the SS-11 production sharing contract.

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“The relinquishment, which was recommended by the operator [Santos Sangu] and unanimously approved by the joint venture partners, was pursuant to the terms of the PSC,” the Singapore-headquartered company said.

“Pursuant to the relinquishment, the US$5.5 million [net] bank guarantee (fully paid by KrisEnergy since the effective date of the PSC) has been retained by the Bangladesh authorities.”

Australian independent Santos and KrisEnergy in March 2014 signed the PSC for the 4475-square kilometre Block SS-11, which had a five-year exploration term that was subsequently extended by 24 months until March 2021.

While Santos has since sold out, the official name of the block's operator has remained Santos Sangu.

The joint venture had committed to acquire 2D and 3D seismic and drill an exploration well in the five-year exploration phase.

While seismic surveys were indeed performed, no wells are known to have been drilled on the tract.

Operating entity Santos Sangu operated Block SS-11 with a 45% stake, KrisEnergy also held a 45% share and state-owned Bangladesh Petroleum Exploration & Production Company (Bapex) had a carried 10% working interest.

Australia's Santos several years ago sold a portfolio of Asian assets including Block SS-11 to Ophir Energy, which itself was subsequently acquired by Indonesia’s Medco Energi. Medco in the third quarter of 2019 announced it had withdrawn from the Bangladesh asset.

The Block SS-11 relinquishment has an effective date of 14 November 2020.

KrisEnergy remains operator of the producing Bangora gas field located on the Block 9 PSC onshore Bangladesh.