International tender for oil and gas exploration in Bay of Bengal in March
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Photo: Collected
Prime Minister Sheikh Hasina has approved the international tender for oil and gas exploration in the sea. Chairman of Petrobangla Janendra Nath Sarkar confirmed to Barta24.com that the international tender will be floated in March.
He confirmed this information in an exclusive interview given to Barta24.com on Thursday (February 8). The Chairman of Petrobangla said that the Prime Minister approved the invitation of international tenders on Thursday.
He also said, we want to open the tender in March itself. 6 months time will be given for submission of bid documents. Want to finalize PSC (Production Sharing Contract) in November or December. Before this, road-shows will be held in different countries.
What about companies like American multinationals Exxon Mobil and Chevron who have shown interest in the past? In response to such questions, the Chairman of Petrobangla said, we are moving towards competitive rates. Here the company whose offer will be favorable and those who are considered eligible will get the job. First of all, the interest of the country will be our consideration.
Model PSC-2019 (Production Sharing Contract) has been revised with many concessions including increase in gas prices. The Cabinet Committee on Procurement approved PSC-2023 on July 26 last year. After that, the tender was delayed due to election engagements.
According to Petrobangla sources, PSC has been made attractive to attract multinational companies. Gas price was fixed in previous PSCs but this time gas price has not been fixed. The price of gas will rise with the international market price of Brent crude. The price of gas per thousand cubic feet is equal to 10 percent of Brent crude. That is, if the price of Brent crude is 80 dollars, the price of gas will be 8 dollars which in the existing PSC had a fixed rate of 5.6 dollars and 7.25 dollars in shallow and deep sea respectively. Brent crude prices will be averaged over the entire month.
Along with the price, the share ratio of the government has also been lowered. According to Model PSC-2019, the proportion of Bangladesh will continue to increase with the increase in gas production. And the shares of multinational companies continue to decrease. Bangladesh's share will rise from 35 to 60 percent in the deep sea and 40 to 65 percent in the shallow sea. However, if the contractor does not get gas by digging a well within two years of the stipulated time or if it is not commercially extractable, there is an opportunity to increase the share by 1 and 2 percent respectively. In case of gas sale, the first proposal should be given to Petrobangla, if Petrobangla does not want to take it, the foreign company will get the opportunity to sell gas to a third party.
After settling the maritime boundary disputes with Myanmar in 2012 and India in 2014 in the International Court of Justice, Bangladesh established ownership over a total of more than 118,813 square kilometers of sea area. A decade later the success of that sea border came to nothing, especially in terms of mineral resources. It is believed that the doors of possibilities are going to open through the new tender.
Energy experts believe that the solution to the dire energy crisis of the country is hidden under this huge body of water because Myanmar has got huge gas reserves next to the block of Bangladesh. Calling for tenders at sea was not getting much response. Bangladesh's PSC-2019 is not attractive; it was decided to update it in November 2020 (in an inter-ministerial meeting) on the complaint of multinational companies.
On the other hand, the Division of Energy and Mineral Resources decided to conduct a comprehensive multi-dimensional survey in the vast sea area. Petrobangla called the international tender on February 4, 2015 with the name Multi Client Survey. Norwegian company TGS and France's Schlumberger Consortium have prepared their report, Petrobangla sources said.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid told Barta24.com that many big foreign companies are showing interest in offshore oil and gas exploration due to the attractiveness of the PSC model.
In 2008, the deep sea blocks DS-10 and DS-11 were leased by the American company ConocoPhillips. After two years of searching, the company amended the contract and demanded an increase in gas prices. Due to the lack of agreement with the Bangladesh government, the two blocks left in 2014. On the other hand, in December 2012, ConocoPhillips and State Oil jointly submitted a bid for the three blocks of deep sea DS-12, DS-16 and DS-21 in the international tender. Later, Conoco pulled out and the blocks could not be leased. At the same time, Petrobangla called a separate tender for the shallow-sea blocks. In that bidding process, block SS 11 was leased by Santos and Chris Energy and blocks SS 4 and SS 9 by two Indian companies, ONGC Videsh (OVL) and Oil India (OIL). Santos concluded operations from Bangladesh without drilling a well after conducting two-dimensional and three-dimensional surveys in the SS-11 block. ONGC drilled an exploratory well in Block 4 after conducting 3-D and 2-D seismic surveys in the two blocks, but no gas was found. They are said to be drilling two more wells.
