UPDATE:Bangladesh To Avoid Exploration In Disputed Territory

Bangladesh on Tuesday played down concerns of mounting tensions with neighbor Myanmar on a maritime dispute over a high profile oil and gas exploration region.

Bangladesh's New Age newspaper earlier in the day reported that Myanmar had warned ConocoPhillips (COP) against exploring a Bangladesh offshore block the company won in a recent licensing round.

Bangladesh officials said that along with the warning, Myanmar had mobilized additional soldiers, sparking tension on the two countries' border, the Press Trust of India news agency reported.

"This is an old dispute between us. We are not aware of any troop movement by Myanmar, with regard to this dispute at least," a senior official at Bangladesh's ministry of foreign affairs told Dow Jones Newswires.

He said Bangladesh would take care to avoid trespassing on disputed territory, even if it means modifying the exploration blocks to exclude regions claimed by Myanmar.

"We are showing respect to Myanmar's maritime claims - regardless of whether they can be claimed under law, we will not infringe them," he said.

Bangladesh will direct winners of oil acreage, including ConocoPhillips, to avoid exploration activity in the disputed areas, said Muqtadir Ali, chairman of state-run Petrobangla. "We need to get the exact coordinates of the so-called disputed boundaries to do that," he said. "We are yet to sign the production sharing contract with the companies; we will sort of these issues before signing."

Bangladesh wants to explore its offshore regions to secure future energy supplies, but being geographically sandwiched between India and Myanmar, faces competing interest from its two neighbors for a large chunk of the maritime territory.

"There are some concerns on this issue...but from our side (the energy ministry), we are proceeding with allocation of blocks to the two companies," Bangladesh Energy Secretary Mohammad Mohsin told Dow Jones Newswires.

Executives from the U.S. energy giant informed the Bangladesh Oil, Gas & Mineral Corp., or PetroBangla, on Monday of the letter of warning from Myanmar, the newspaper reported, citing sources present at the meeting. PetroBangla had earlier awarded rights to explore the block to ConocoPhillips. Ali declined to say whether Petrobangla had been informed by Conocophillips about the letter.

The ConocoPhillips executives also asked to discuss the matter with Bangladesh's foreign ministry, the newspaper cited an unnamed official as saying.

-By Gurdeep Singh, Dow Jones Newswires; 65-9386 9495; [e-mail]