Govt to offer bidding for model PSC 2019

The government sets to offer the fifth round of bidding for the offshore model PSC 2019 by the end of this year following a decision made by Petrobangla and the Ministry of Energy and Mineral Resources. "We are finalising the draft of a new model production sharing contract (PSC) which is now awaiting vetting of the Law Ministry," a senior official of the Energy Division told the Daily Observer on Wednesday. According to the Energy Division, the model PSC has been scrutinized by the Petrobangla officials of the Energy Division.

It is now waiting for the Law Ministry approval. Following the approval it will be sent to the Cabinet Committee on Economic Affair for final approval. "Two things will dominate the new PSC: (a) new gas price and (b) the 'cost recovery'. We are going to increase the gas price, a long pending demand of the IOC. We are not taking the IOC's suggestion as far as the cost recovery is concerned. However, the cost recovery will remain unchanged," sources said.
The existing PSC fixed the gas price at $US 6.50 and allowed the IOC to take 80 per cent as the cost recovery. "We are trying to adjust our oil price with the neighboring countries. We accommodated recommendations from a New Zealand-based international consultant," he added.

There are 22 onshore blocks and 26 offshore blocks of oil and gas deposits in Bangladesh. Currently, US-based Chevron and KrisEnergy of Singapore are engaged in onshore hydrocarbon operations while Australian company
Santos and Indian companies ONGC Videsh Ltd and Oil India Ltd are conducting surveys for offshore oil and gas exploration. According to the new model PSC, an IOC would sell around 80 per cent of the gas produced to Petrobangla at $7.20 per Mcf (1,000 cubic feet, over head cost), instead of $6.50. The amendments also exempted IOCs from paying transport tariffs and corporate tax.