Numerous IOCs upbeat about bay gas exploration

Hopes run high about a good response from international oil companies (IOCs) in bidding for bay gas exploration as the deadline for tendering in the offshore bidding round ends tomorrow (Monday).
"We are hoping that a good number of IOCs will submit bids for oil-and-gas exploration in the Bay of Bengal as many of them purchased bid documents and kept enquiring on it for long," a senior Petrobangla official told the FE Saturday.
He said the previous deadline for submitting bids, September 9, was extended up till December 9 following requests from some potential IOCs.
Petrobangla floated the international tender on March 10 with a total of 24 offshore blocks -- 15 in deep sea and nine in shallow sea - on offer for exploration lease.
The bidding process is launched fronting the banner 'Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024'.
The energy corporation also held a promotional seminar on May 8 wherein more than a dozen international oil companies took part.
A good number of them, including reputed ones from the U.S., Europe and Asian countries, have shown interest in joining the bidding, he said.
The 15 deep-sea blocks on offer are DS-08, DS-09, DS-10, DS-11, DS-12, DS-13, DS-14, DS-15, DS-16, DS-17, DS-18, DS-19, DS-20, DS-21 and DS-22.
The nine shallow-water blocks are SS-01, SS-02, SS-03, SS-05, SS-06, SS-07, SS-08, SS-10 and SS-11.
Production-sharing contracts (PSCs) will be inked with the IOCs in line with the newly approved model PSC through which the terms have been made 'lucrative' with more sweeteners for the contractors.
"The IOCs will not be required to submit any signature bond," he said, adding that they will not have to pay any royalty either.
"No import duties will be charged from the firms for import of machinery and equipment necessary for exploration and drilling," the official said about baits.
Petrobangla will bear the income-tax liability on behalf of the IOCs.
The gas price for the offered blocks will be tagged to the price of brent crude on the international market so that the gas price becomes flexible in line with the movement of global oil-price indices.
The gas price will be 10 per cent of Brent Crude, meaning if the Brent crude is traded at $85 per barrel, the gas price would be $8.5 per million British thermal unit (MMBTu).
The pricing modalities will be same for both shallow and deep-water blocks. Petrobangla will purchase the explored IOC gas at the Brent crude-linked rate, which will have no capping.
Capping-free price means Bangladesh will have to purchase the gas, to be extracted by the contractors, at a rate as high as it goes or as low as it slips. The foreign firms will also have the liberty to export natural gas after meeting domestic demand following Petrobangla's first right of refusal.
They will be able to repatriate full profit, too.
There will be provision for assignment of interest and share-transfer and 100-percent cost recovery with an annual cap of 75 per cent.
They will, however, have to provide bank guarantees for performance of the minimum exploration programme.
Meanwhile, contractors must have a mandatory work programme consisting of a 2D seismic survey and the mandatory purchase of available 2D multi-client seismic data to get relief from mandatory work obligations proportionately.
They will have minimum work obligations in each of the exploration periods of nine years, of which the initial-study phase will last four years, then an exploration phase of two years and another three years for subsequent exploration.
Over the last decade Bangladesh had launched only one bidding round - in 2017 - and that was only for three deep-water blocks, according to Petrobangla data.
Although Posco-Daewoo was awarded one deep-water block - DS-12 - after the bidding, the South Korean oil-and-gas -exploration company left the block in 2020 after carrying out a 2D seismic survey. Previously Petrobangla had floated a bidding round in 2012, through which three shallow-water blocks and one deep-water block were awarded to contractors.
Currently, four IOCs have active PSCs, either individually or under joint venture, to explore three shallow-water blocks in Bangladesh.
U.S. oil-major Chevron is active in exploring and producing natural gas in three gas fields under onshore blocks 12, 13 and 14. Singapore's KrisEnergy is producing natural gas from the Bangura field under Block 9. ONGC Videsh and Oil India are jointly exploring shallow -water blocks SS-04 and SS-09.

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