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Bangladesh moves to go for auction to explore offshore gas

Updating of Model PSC underway for 1st int’l bidding since 2014

Sadrul Hasan, UNB Staff Writer

Sunday 26 August, 2018 08:43:08 am

Bangladesh moves to go for auction to explore offshore gas

Photo: Collected

Dhaka, Aug 25 (UNB) – The government is updating the Model Production Sharing Contract (Model PSC) to invite a new round of international bidding for oil and gas exploration in the country’s offshore blocks sometime next year.

According to official sources, the state-owned Petrobangla has been updating the Model PSC by bringing in some changes in the provision to make the offer more attractive for the international oil companies.

“One of the major changes is reduction of the mandatory seismic survey period to 3 years from the existing 5 years and giving option to the contractor to decide whether it would move further for exploration work”, said a top official of the Petrobangla involved in the updating task.

He also informed that under the existing Model PSC, a contractor is given 5 years’ time where it has to mandatorily conduct survey and also drill a well as part of the assignment.

But in the new Model PSC, the contractor will initially conduct a seismic survey within 3 years and complete the data analysis and then inform the government whether it wants to move further with its plant or leave the country.

If the contractor finds the gas block potential and decides to stay in the contract, then it has to inform the government and also conduct drilling within next two years, said the Petrobangla official.

Sources said that after settlement of the disputes with neighbouring Myanmar and India, Bangladesh’s total number of gas blocks stood at 48. Of these, there are 22 onshore blocks and 26 offshore blocks. Of these offshore blocks, 11 are shallow blocks while remaining 15 are deep sea blocks.

But so far, Bangladesh made no major breakthrough in offshore gas exploration after settlement of maritime boundary disputes with Myanmar in March 2012 and with India in July 2014. So far it could only award four offshore blocks out of total 22. According to media reports, Myanmar so far awarded 26 blocks in its maritime area.

Officials said the Energy Ministry mainly concentrated on import of LNG to meet its demand in last few years.

Officials said that in the four awarded offshore blocks, the shallow blocks SS-11, SS-04, SS-09 were awarded in 2014 bidding round while the only deep sea block DS-12 was awarded in 2017 under a special initiative.

Indian joint venture company ONGC Videsh-Oil India obtained the shallow blocks SS-04 and SS-09 while Santos-Kris Energy JV got the block SS-11. The only deep sea block was awarded to South Korean Posco-Daewoo Corporation in 2017 through inviting expression of interest (EOI).

“Since there was a big time gap between the last round of bidding in 2014, we’re now moving to invite international bidding in 2019”, said the Petrobangla official adding that necessary documents are almost ready and after a presentation before the policymakers, the documents will be sent to the Law Ministry for vetting.

“Once we receive the vetting, we have a plan to invite the bidding in the first half of 2019”, said the official.

Recently, the Prime Minister’s Energy Advisor Dr Tawfiq-e-Elahi Chodhury also mentioned about the government’s plan for inviting international bidding for the offshore blocks.

He, however, rejected any idea of possible bidding for onshore areas.

Petrobangla officials said in the new round of bidding, gas price will remain at $5 per thousand cubic feet (mcf) for shallow water blocks and $6.5 per mcf for deep sea blocks.

They also said there will be no provision for allowing gas export for the companies winning the shallow offshore gas blocks while only export provision will remain there for deep sea blocks.

In this regard, the contractor will be allowed to export its portion of gas share. But before export, it has to offer first to the Petrobangla. If the Petrobangla is unable to buy the gas, then it will offer to any local company to buy the gas, they said.

If there is no local buyer, then the company will be allowed to export its own share of gas, said the Petrobangla official.