Petrobangla defers offshore bidding round again

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FE Report
Bangladesh has deferred again its offshore bidding round until mid-December from November as the state-owned Petrobangla is yet get the final go-ahead from the energy ministry, Platts, a division of the McGraw-Hill Companies, USA, said Friday, quoting the Petrobangla Chairman Husain Monsur.
"We are now waiting for a date from the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources to float the international tender," Mr. Husain Monsur said.
Petrobangla has completed all the formal procedures to launch the bidding round in mid-December, the Platts said.
International Oil Companies are showing growing interest to take part in the country's offshore bidding for hydrocarbon exploration in the Bay of Bengal, it said, quoting the Petrobangla Director for production sharing contract Muhammad Imaduddin.
"Brazil's Petrobras, Norway's Statoil, Singapore's Kris Energy and Indian Oil and Natural Gas Corp. Ltd., are among the companies which have held talks with Petrobangla to take part in the bidding," Mr. Imaduddin said.
Australian Santos, the operator of the country's sole producing offshore Sangu-11 well, US-based ConocoPhillips, the winner of two gas blocks in the previous 2008 offshore bidding, the China National Offshore Oil Corp. and Sinopec are also eying to take part in the next offshore bidding, said an industry insider, according to the Platts.
Bangladesh's Cabinet Committee on Economic Affairs earlier approved the model production sharing contract to be inked with bid winning companies, Platts reported earlier, it mentioned, adding Bangladesh finalised the proposed PSC allowing a 72.41 per cent hike in the sales price of gas produced from the blocks on offer.
According to the Platts, gas prices in Bangladesh are pegged to high sulfur fuel oil prices. In the planned 2012 round, the floor price for HSFO has been raised to $100/mt and the ceiling price to $200/mt, which works out to a gas price of around $5/Mcf based on a proposed pricing formula.
In the 2008 bidding round, the floor price for HSFO in the formula was fixed at $70/mt and the ceiling price at $180/mt. This worked out to a gas price of around $2.90-2.95/Mcf, it said.
The Platts further said Bangladesh will offer a total 12 offshore gas blocks -- nine in shallow water and three in deep water -- in the Bay of Bengal in the upcoming round, scheduled for the first week of October.
This will be the country's fourth bidding round. Earlier ones were held in 2008, 2001 and 1997, it mentioned.
Dhaka is also planning to offer two shallow water fields -- Kutubdia and Teknaf -- under a "special package" for exploration in this round. The two fields will be tagged with two of the 12 blocks, so the companies that are awarded the license will have to explore the fields, said the Platts, quoting Imaduddin.
He was also quoted as saying: " As part of the special package for the fields, license holders will have to give state-owned Petrobangla an additional 5.0 per cnet of "profit-gas" to be produced, on top of Petrobangla's regular profit-sharing structure."
As per the terms of the PSC, Petrobangla's regular profit-sharing structure is as follows: the company will receive no less than 55 per cent of profit if gas production is up to 75,000 Mcf/d; no less than 60 per cent if production is 76,000-150,000 Mcf/d; no less than 65 per cent if the output is 151,000-50,000 Mcf/d; and no less than 70 per cent if output is 251,000-400,000 Mcf/d; no less than 75 per cent if output is 401,000-600,000 Mcf/d; and no less than 80 per cent if output is above 600,000 Mcf/d, it said.
"Other features of the PSC include full repatriation of profits; no signature bonuses or royalties; no duties for equipment and machinery imported for operations during the exploration, development and production phases; 100% cost recovery; and production bonuses," the Platts quoted Mr. Imaduddin as saying.
Gas exports would be prohibited under the new bidding round, he said. In the 2008 bidding round, gas exports via pipeline were banned but LNG exports were allowed, said Mr. Imaduddin.