Although the PSC is final, there is laxity in calling for tenders in the sea
Although PSC-2008 was finalized in just 3 months, three quarters of a year has passed due to slackness in updating PSC-2023 (Production and Sharing Contract). Finally, even though the much-anticipated PSC is finalized, no initiative to call for tenders is visible.
After the approval of PSC, the then Secretary of the Energy and Mineral Resources Division Dr. Khayeruzzaman Majumdar said, we want to call an international tender within a month.
According to Petrobangla sources, the process of approval of bid documents is started as soon as the general PSC is finalized. But even after one and a half months have passed since PSC was approved, the tender file has not been picked yet. However, the draft bid documents are kept ready, the file can be presented within a few hours if requested.
The then Director (Mining) of Petrobangla Maqbool E-Elahi Chowdhury played a key role in finalizing the Model PSC-2008. The former director told Barta24.com that in 2008 I finalized it within a maximum of 3 months. Why will it take three and a half years now? We then kept the draft open for public comment, we held 4 public consultations. It wasn't that long ago. Nothing has been done this time. The point is what the goal is. If your goal is to import gas, it is natural that domestic gas extraction and exploration will lose importance.
Petrobangla sources said that at least 3 months should be given if international tenders are called. Many times it is seen that a party requests additional time for submission of tenders. It is an international custom to give them time then. It will also take two-three months to evaluate the tender after submission. But sitting idle is wasting time. 15 deepwater and 9 shallow water blocks are up for tender. The most worrying thing is that the longer Bangladesh delays, the more it suffers because Myanmar has been extracting gas from the neighboring blocks of Bangladesh for a long time.
Offshore oil-gas exploration with untapped potential after huge sea wins due to Petrobangla's sloppiness. After settling the maritime boundary disputes with Myanmar in 2012 and India in 2014 at the International Court of Justice, Bangladesh established ownership over a total of more than 118,813 square kilometers of sea area. A decade later the success of that sea border came to nothing, especially in terms of mineral resources.
Energy experts believe that the solution to the dire energy crisis of the country is hidden under this huge body of water because Myanmar has got huge gas reserves next to the block of Bangladesh. Calling for tenders at sea was not getting much response. Bangladesh's PSC-2019 is not attractive; it was decided to update it in November 2020 (in an inter-ministerial meeting) on the complaint of multinational companies.
The decision of the Energy and Mineral Resources Division was sent to Petrobangla in January (2021). The director of Petrobangla (PSC) Shahinur Islam kept the file suppressed for about 10 months due to mysterious reasons. The matter was never prioritized by Petrobangla even though the work started after ten months of delay. It takes another 8 months to finalize the consultant. In May 2022, Singapore-based Wood Mackenzie Asia Pacific was appointed as a consultant. The company submitted the draft after 4 months and the Cabinet Committee on Procurement gave final approval on July 26 after file manipulation.
According to Petrobangla sources, the model PSC-2019 (Production and Sharing Contract) has been revised with many concessions including increase in gas prices. This initiative has been taken to attract multinational companies. Although the price of gas was fixed in the previous PSCs, this time the price of gas will rise with the international market price of Brent Crude. The price of gas per thousand cubic feet is equal to 10 percent of Brent crude. That is, if the price of Brent crude is 80 dollars, the price of gas will be 8 dollars which in the existing PSC had a fixed rate of 5.6 dollar and 7.25 dollar in shallow and deep sea respectively. In the case of Brent Crude price, the calculation will be done by averaging the price of the entire month. Along with the price, the share ratio of the government has also been lowered.
If the contractor does not get 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 percent respectively. In case of selling gas, the first proposal should be given to Petrobangla, if Petrobangla does not want to take it, foreign companies will get the opportunity to sell gas to third parties.
On the other hand, the Energy and Mineral Resources Division decided to conduct a comprehensive multi-dimensional survey in the vast sea area. Petrobangla called the international tender on February 4, 2015 with the name Multi Client Survey. Petrobangla and the Division of Energy and Mineral Resources have also failed to complete that process on schedule. Norwegian company TGS and France's Schlumberger Consortium have also prepared their reports, Petrobangla sources said. Still laxity is noticeable in calling for international tenders.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid told Barta24.com that many large foreign companies are showing interest in offshore oil and gas exploration due to the attractiveness of the PSC model. US Company Exxon Mobil is showing great interest. They have already made two proposals. We can enter into a non-binding MOU.
In 2008, the deep sea blocks DS-10 and DS-11 were leased by the American company ConocoPhillips. After two years of searching, the company amended the contract and demanded an increase in gas prices. In 2014, Block left the two due to disagreements with the rocker. On the other hand, in the international tender in December 2012, ConocoPhillips and State Oil jointly submitted bids for the three blocks of deep sea DS-12, DS-16 and DS-21. Later, Conoco pulled out and the blocks could not be leased. At the same time, Petrobangla called a separate tender for the shallow-sea blocks. In this bid process, block SS 11 was leased by Santos and Chris Energy and blocks SS 4 and SS 9 by Indian companies ONGC Videsh (OVL) and Oil India (OIL). Santos concluded operations from Bangladesh without drilling a well after conducting two-dimensional and three-dimensional surveys in the SS-11 block. ONGC drilled an exploratory well in Block 4 after conducting 3-D and 2-D seismic surveys in the two blocks, but no gas was found. They are said to be drilling two more wells.