Preparations on to launch offshore bidding this month

---

FE Report
Petrobangla has started preparation to launch the offshore bidding round for oil and gas exploration in the Bay of Bengal this month (December) as the Prime Minister has already approved the round, a senior official said.
"We have nearly completed all the formal procedures to launch the bidding round," he said.
The approval from the Premier, who is also in charge of the energy ministry, has paved the way for the state-owned Petrobangla to float tender seeking bids from international oil companies (IOCs) for offshore hydrocarbon exploration, he said.
"The PM's instruction will reach Petrobangla 'officially' immediately," he expressed the hope.
"We shall announce a date on launching of the bidding round upon receiving the PM's instruction in black and white, which will come through the Energy Division of the Ministry of Power, Energy and Mineral Resources," the official added.
The announcement will come by mid-December, he said.
Bangladesh will offer a total of 12 'dispute-free' offshore gas blocks -- nine in shallow water and three in deep water -- in the Bay of Bengal in the upcoming round.
It will include the blocks that have been cleared in line with the verdict from the International Tribunal for the Law of the Sea on March 14 that settled the maritime boundary dispute with neighbouring Myanmar, said the Petrobangla official.
The tribunal, based in Hamburg, Germany, upheld Bangladesh's claim to an exclusive economic zone of 200 nautical miles in the Bay of Bengal, and to a substantial share of the outer continental shelf beyond, thus ending its maritime boundary dispute with Myanmar.
None of the blocks disputed with neighbouring India will be offered in the upcoming bidding round, he added.
The dispute between Bangladesh and India has been referred to The Hague's Permanent Court of Arbitration and a verdict is expected in 2014.
During the previous offshore bidding round in February 2008, Bangladesh had offered 28 offshore blocks, of which 20 were in deep water and eight in shallow water.
The response to the offer was lukewarm because of Bangladesh's maritime boundary disputes with neighbours Myanmar and India.
So Bangladesh could award only parts of two deep water gas blocks -- DS-08-10 and DS-08-11 -- to US-based ConocoPhillips, and that too after a series of meetings three years after the launch of the bidding round on June 16, 2011.
ConocoPhillips signed a production sharing contract PSC) with Petrobangla to explore around 70% of block DS-08-10 and 85% of block DS-08-11.
Bangladesh has not been able to ink a PSC with UK's Tullow for shallow water gas block SS-08-05 because of the dispute with India.
Bangladesh's Cabinet Committee on Economic Affairs earlier approved the model PSC to be inked with bid winning companies.
Bangladesh finalised the proposed PSC allowing a 72.41 per cent hike in the sales price of gas produced from the blocks on offer, excluding tax.
Gas prices in Bangladesh are pegged to high sulfur fuel oil prices. In the planned 2012 round, the floor price for high sulfur fuel oil (HSFO) has been raised to $100 per tonne and the ceiling price to $200 per tonne, which works out to a gas price of around $5.0 per unit (1,000 cubic feet) based on a proposed pricing formula.
In the 2008 bidding round, the floor price for HSFO in the formula was fixed at $70 per tonne and the ceiling price at $180 per tonne.
This worked out to a gas price of around $2.90-2.95 per unit.
The 2012 offshore bidding round will be the country's fourth one.
Earlier ones were held in 2008, 2001 and 1997.
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 licence will have to explore the fields, the official said.
As part of the special package for the fields, licence holders will have to give Petrobangla an additional 5% of "profit-gas" to be produced, on top of its regular profit-sharing structure, he said.
Bid winning IOCs will enjoy 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 per cent cost recovery; and production bonuses.
Gas exports would be prohibited under the new bidding round, he said. In the 2008 bidding round, gas exports via pipeline were banned but liquefied natural gas (LNG) exports were allowed, he said.
Exploration leases for shallow water blocks would be of seven years in the upcoming bid round, down from eight years, and for deep water it would be eight years, down from nine years.
Companies would also be able to sell the gas produced directly to third parties in the domestic market, without going through Petrobangla but the latter will have the first right of refusal, he said.