No visible progress has been made to invite international tender for oil and gas exploration in offshore areas of the country, although the government has already finalised the Bangladesh Offshore Model Production Sharing Contract (PSC) 2023 in June this year.
However, Energy and Mineral Resources Division and Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) earlier speculated that the invitation of international bidding would start within a month and be completed in a year after the PSC is finalised.
Even though more than two months have passed since the finalisation of the new PSC model, the government is yet to pack the tender files, Petrobangla officials told The Business Post.
Geologist Maqbul-E-Elahi Chowdhury, former director of Petrobangla said, “In 2008, we finalised the PSC within 3 months, now it takes three and a quarter years. We then kept the draft open for public opinions and also held public consultations.”
“If the government’s goal is gas import, the domestic gas exploration will lose its importance, no doubt,” he added.
The office of Petrobangla’s Production Sharing Contract informed that at least three months should be given after the international tender is called. Sometimes, tender participants request additional time for the submission of tenders. It also takes two to three months to evaluate after the tender submission.
There is no possibility of an agreement with any new International Oil Companies (IOCs) for oil and gas exploration in offshore areas this year, they said.
Meanwhile, US-based global energy giant ExxonMobil has already offered to invest up to $30 billion for deep sea exploration in the Bay of Bengal. The government said the deal with ExxonMobil would be done within this year under the new PSC. But if the invitation of international tender gets delayed, the deal may be postponed to next year, said Petrobangla officials.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid earlier said, “Many big foreign companies are showing interest in offshore oil and gas exploration due to the appeal of the new PSC model. US company ExxonMobil has shown great interest and already submitted two proposals.”
After settling the maritime boundary disputes with Myanmar in 2012 and India in 2014, Bangladesh confirmed sovereignty over 118,813 square kilometres in the Bay of Bengal. Although a decade has passed, there is no visible success has taken place in the blue economy, especially in oil and gas exploration.
So far, Bangladesh failed to receive better participants for oil and gas exploration, experts said adding that there was no response by IOCs as the PSC-2019 was not attractive enough.
Then in 2020, the government-owned national gas company decided to review the PSC to make it more lucrative to attract multinational companies. The exercise took more than two years to complete.
In May 2022, Singapore-based Wood Mackenzie Asia Pacific was appointed as a consultant for PSC. The Wood Mackenzie submitted the draft after 4 months, but after a long wait, the Cabinet Committee gave the final approval on July 26 this year.
In the new PSC, foreign companies will get three months to submit proposals after a tender is floated. Another major deviation from the 2019 PSC is the gas price. Earlier, the price per thousand cubic feet was fixed at $7.25 for deep sea and $5.50 for shallow sea. In the new model, it will be fixed at 10 per cent of the average Brent crude oil price for the month. If the Brent price of crude oil stands at $100 on average, the gas price will be $10 per cubic feet.
If the foreign company does not find gas by digging the well within two years or if it is not commercially extractable, there is an opportunity to increase the share by 1 and 2 per cent, respectively.
In the case of selling gas, the first proposal will be given to Petrobangla, if Petrobangla refuses to buy, the foreign companies will have the opportunity to sell gas to third parties.
Earlier, US companies Conoco Phillips, Australian Santos Limited, Singapore's Chris Energy and South Korea's Posco Daewoo have searched for oil and gas in multiple blocks in the deep sea.
However, these companies left the work in the middle due to a comparatively lower price of gas. Currently, India's Oil and Natural Gas Corporation Limited (ONGC) has drilled an exploration well in block four offshore Abdesh, but no gas has been found yet. ONGC will reportedly drill two more wells.
Domestic and international energy experts believe that the solution to the energy crisis in Bangladesh is hidden under seawater because neighbouring Myanmar has got huge gas reserves beside the maritime boundary of Bangladesh.