IOC mails reasons for not submitting tenders!
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Photo: Collected
Multinational oil companies (IOCs) have given multiple reasons for not submitting tenders despite buying tenders for oil and gas exploration in the deep sea. Petrobangla sources have confirmed that several companies out of the 7 multinational companies that bought the tenders have mailed their opinions.
It is known that the issues of wheeling charges for the pipeline from the deep sea to the land, Workers' Profit Participation Fund (WPPF), high data prices, as well as the political situation in the country have come to the fore. According to the law of Bangladesh, a fixed amount of money has been given for the WPPF. The huge investment is also supposed to have huge profits; some multinational companies have raised objections to that fund. There is a dispute between the multinational company Chevron and its employees.
Bangladesh invited tenders for oil and gas exploration in the deep sea with great fanfare. Even before the change of power, 7 multinational companies bought the tenders but ultimately refrained from submitting them. Petrobangla has formed a committee to find out the reason for their abstention. The committee mailed the 7 multinational companies that bought the tenders for their opinions. Some of them have sent their opinions verbally, while two companies have already sent their opinions by mail, Petrobangla sources confirmed.
Tenders for oil and gas exploration in 24 blocks (15 in deep sea and 9 in shallow sea) in the sea area of Bangladesh were invited on March 11 this year. A period of 6 months (till September 9) was given for submitting the tenders. Before the time expired, it was extended by 3 months to December 9. 7 internationally renowned companies including the US Company Exxon Mobil bought the tenders, 2 companies bought data from Petrobangla. But none of them submitted their tenders within the stipulated time. For this reason, the tender has been declared abandoned.
A committee was formed with the Director (PSC) as the head to find out the reason. Director PSC Altaf Hossain told Barta24.com, we have mailed each company and asked for their comments. We have received mails from several companies, requesting them to provide more details.
What issues did those who mailed raise? In response to the question, he said that the matter has not reached the stage of commenting now.
After the settlement of the maritime boundary dispute, Bangladesh established ownership over 118,813 square kilometers of maritime area. There are 15 blocks in the deep sea of Bangladesh and 11 in the shallow sea. Indian company ONGC is conducting exploration in two blocks in the shallow sea. Earlier, the last tender was invited in 2016. Then, in 2019, a new PSC was updated, but no tender was called.
To attract the interest of multinational companies, the PSC (Production Sharing Contract) was made attractive. Although the gas price was fixed in the previous PSC, this time it was matched with the price of Brent crude. The price of gas per thousand cubic feet has been set at 10 percent of the price of Brent crude. In the previous PSC, the price was fixed at 5.6 dollars and 7.25 dollars in shallow and deep sea, respectively.
Along with the price, the proportion of Bangladesh's share has also been reduced. According to the Model PSC-2019, with the increase in gas production, Bangladesh's proportion will continue to increase. And the share of multinational companies will continue to decrease. In deep sea, Bangladesh's share will fluctuate from 35 to 60 percent and in shallow sea; Bangladesh's share will fluctuate from 40 to 65 percent. But even then, the lack of any interested companies has become a matter of concern.
Maqbul E-Elah Chowdhury, head of the Model PSC 2008 formulation committee, told Barta24.com that many people thought that companies would rush in if the gas price was increased. That idea has been proven wrong. In addition to finding out why the bids were not submitted, it is also necessary to see why only 7 companies bought the tenders. There are some shortcomings in the PSC; the condition here is that only companies that extract 20,000 barrels of gas (equivalent to oil) per day will be able to buy the tender. Many companies have been excluded here. I think it should be 10,000 for deep sea and 5,000 barrels for shallow sea. Then many more companies will be able to participate.
He said, when we formulated the PSC in 2008, we were going to give a condition of 15,000 barrels. A foreign company came to us and asked us to give a condition of 25,000 barrels. Although we did not agree, the ministry increased it to 25,000. Another reason is that the price of data packages is very high. Some packages cost millions of dollars. In other countries, this data is provided for free. In 1974, this data was open in our country, when many companies participated.
The political situation played a big role, he commented, before making investments, big companies analyze the overall situation.
Amjad Hossain, former managing director of Bapex, told Barta24.com, "Will we actually do data business, or do we need gas? That needs to be identified first." I do not see any justification for keeping the data price so high.
Petrobangla said that the daily authorized load in 8 consumer categories in the country is 5,356 million cubic feet, against which the demand is estimated to be 3,800 to 4,000 million cubic feet. Against the demand, 2,800 million cubic feet of gas is being supplied daily, and the deficit remains around 1,200 million.
However, in the 2023-24 fiscal year, information was found that an average of 2,493 million cubic feet of gas was supplied in the information submitted to BERC. What is more worrying is that the production of domestic gas fields is constantly decreasing, while the demand is increasing. Although the production was 2,800 million at one time, it is now 1,930 million. The country has come to a standstill. One of the reasons for this is considered to be the stagnation in oil and gas exploration. Previous governments focused more on imports than exploration
