International Oil Companies (IOCs) did not respond to Petrobangla's invitation for participation in oil and gas exploration bidding in the Bay of Bengal offshore blocks. Earlier Petrobangla floated open tender for bidding on March 10, 2024. The deadline for submission of bidding documents for exploration of oil and gas under the Production Sharing Contract (PSC) was set initially for September 2024. It was further extended until December 9, 2024. Petrobangla invited 55 IOCs for participation in the bidding process for 9 offshore blocks in the shallow sea and 15 deep sea blocks. As per Petrobangla information, seven IOCs bought tender documents and nine IOCs bought seismic survey and other geological data offered by Petrobangla prior to submission of the bidding documents. Geologists have been considering the Bay of Bengal offshore area of Bangladesh as very attractive for oil and gas field discovery. However, no response for Petrobangla bidding for leasing out Bangladesh offshore blocks have surprised Petrobangla and energy sector officials. Also, the question emerged, whether the high expectations for attractive oil and gas field discovery in the maritime area of Bangladesh are really justified. Experts believe this 'no response' will further delay the oil and gas exploration process in the country. As a result, the country's dependence on costly primary fuel import will increase further.
Currently, Indian oil company ONGC has been engaged in two shallow offshore blocks for oil and gas exploration under PSC Contract with Petrobangla. The last International bidding for offshore blocks was organised by Petrobangla in 2016. The PSC with ONGC was signed in 2012. For deep offshore blocks (DS-10 and DS-11) Petrobangla signed PSC with ConocoPhillips following PSC bidding process in 2008. But the company relinquished the blocks after exploration campaigns during 2012-2013. Since then Bangladesh received little interests from IOCs for exploration in the deep offshore blocks in the maritime area of Bangladesh.
After several amendments in the Model PSC documents and seismic survey carried out in the offshore area for identifying oil and gas potentials, different IOCs including ExxonMobil, Chevron, PETRONAS, TGDS and Schlumberger, Inpex Corporation, JOGMEC, SPA, Chinook Energy Inc, KrisEnergy Ltd. and ONGC expressed their interests for participation in oil and gas exploration. These companies expected modifications of the Model PSC Contract Terms and more financial benefits for investors in the oil and gas sector. Petrobangla has amended a number of times the Model PSC document to make it flexible and investment friendly. Also, seismic survey data was gathered ( a two dimensional multi-client seismic survey) and offered with the help of international contractor in the Bangladesh maritime area to better understand the geological potentials for oil and gas exploration in the offered blocks.
Sector experts believe that the existing political situation, depressed market of oil and gas in the international arena may have discouraged participation in the tender process for Bangladesh offshore blocks. Petrobangla Chairman Zannedra Nath Sarker considers that the situation needs thorough assessment and further consultations with the potential IOCs.
Bangladesh desperately needs investment and advanced technological assistances from experienced IOCs for oil and gas exploration in its maritime area. The country has so far 29 discovered gas fields. Among the known gas fields, 20 fields produce natural gas with the help of 107 production wells. Present domestic gas production is approximately 1,872-1,960 mmcfd. As per the estimate of the Hydrocarbon Unit, there are approximately 9 Trillion cubic feet (TCF) (proven and probable) gas reserve unutilised in the country. LNG has been imported and approximately 820 mmcfd (re-gasified LNG) are being added daily. On the contrary, the demand for gas stands at approximately 4,000 mmcfd. The present gas consumption practices indicate that electricity generation units are the major consumers (43 per cent) of natural gas in the country. Other consumers include industries (18 per cent), captive generators (17 per cent), residential (11 per cent), fertiliser factories (5 per cent), CNG (5 per cent).
As the natural gas production from the domestic sources has been declining rapidly, demands for LNG import have been increasing to ensure primary energy supply. Importing LNG and its processing costs at the FSRU are costly. The existing re-gasification capacity for LNG remains restricted (two installed FSRU with a total maximum capacity to re-gasify 1,100 mmcfd gas). Alternative available sources of commercial primary energy are costly and import based too. In the current year, approximately 6.9 million tonnes of liquid petroleum was imported and supplied to different consumers (transport, power, industry, agriculture, domestic and others sectors) in the country.
Primary energy supply shortages have been causing pains for carrying out economic activities in the country. Business and industry owners have been demanding smooth and quality supply of energy for maintaining industrial production and projected growth. Adviser for Energy and Mineral Resources Muhammad Fouzul Kabir Khan in a seminar organised by the DCCI on December 7, 2024 said that ' we need 4,000 mmcfd gas but the supply is lower than 3,000 mmcfd'. To reduce the demand and supply gap, the Adviser suggested enhancing gas exploration activities in the country.
Experts believe that the 'unexpected' outcome of the PSC bidding process in 2024 for the offshore blocks calls for objective assessment of the situation. As Bangladesh has no record of major oil and gas field discovery in the Bay of Bengal and available data do not offer attractive enough indications for oil and gas field discovery so far, the conventional invitation for tender may not help Petrobangla to find technically competent and financially strong partners for oil and gas exploration (especially in the deep offshore blocks). Also, complicated geology there may require flexible approach for awarding PSC. Prior consultation with the potential IOCs, assessing their expectations from Petrobangla are important preparatory works to be done before floating tenders. Flexible, attractive and balanced package from Petrobangla may help find appropriate PSC partner for exploration activities in the offshore blocks.
Mushfiqur Rahman is a mining engineer.
He writes on energy and environment issues