Petrobangla shortlists 4 oil firms to upgrade PSC

Petrobangla, the state-owned oil and gas corporation, has initially selected four companies to upgrade Production Sharing Contract (PSC) document that would convince the international oil companies (IOCs) to invest in Bangladesh's offshore gas fields,
"We scrutinized four international companies' bids for the purpose. Finally Wood Mackenzie, IHF Global, PWC and Gaffney, Cline & Associates have been selected initially. One of them will be selected finally," a senior official of Petrobangla told the Daily Observer on Monday.
He said the companies will submit other documents by February 6. "Hopefully we could be able to appoint the right bidder by the end of February," he said.
The state-owned oil and gas exploration corporation has received expression of interest (EOI) letters from eight global players to conduct the multi-client seismic survey in the offshore sea blocks.
Earlier, Petrobangla set November 21 as the deadline to submit EIO by the interested bidders.
Following the recent fuel price hike in the international market, the government is now all set to amend the Model Production Sharing Contract (PSC)-2019 to attract international oil companies (IOCs) for gas exploration.
In 2019, Petrobangla raised the gas price to US$5.5 per thousand cubic feet (MCF) for IOCs in shallow water blocks while $7.25 per MCF for deep sea blocks.
In 2019, the government set a target for inviting international bidding in March 2020 for exploration in offshore areas but it was postponed due to coronavirus pandemic.
The government is now importing LNG at $36 per MMBtu while it was just below $10 early this year.
"At least a 15-year experienced foreign firm will be hired to help the government to prepare the amendments to the PSC in the light of the IOCs expectations," officials said.
"We hope to complete the amendments by May and invite international bidding for IOCs in April 2022 in order to start exploration works before the end of 2022," officials said.
The country has a total of 48 blocks of which 26 are in offshore areas and 22 are onshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water and 15 are located in deep sea (DS) water.
The last model PSC was adopted in 2012 and it was later amended following immense pressure from IOCs, which argued that the prices for oil and gas listed were too low.
According to the last amendments, an IOC would sell around 50 percent of the gas produced to Petrobangla at $6.50 per Mcf (1,000 cubic feet)+2 per cent increase per year, instead of $5.50.The amendments also exempted IOCs from paying transport tariffs and corporate tax.
The government, in the new offshore model production sharing contract, is now planning to increase this to $7.25 per Mcf+2 per cent increase per year.
Petrobangla mulled the enactment of a new PSC for the off-shore block after it invited fresh bids from international companies for two-dimensional (2D) seismic surveys of 21 hydrocarbon blocks in the Bay of Bengal in the middle of December 2015.
Under a Model PSC, normally, if any IOC discovers gas, it gets 40 percent stake
while the government obtains the remaining 60 percent.
The country's natural gas output is currently hovering around 3,266 million cubic feet per day (mmcfd), of which 921 mmcfd is regasified imported LNG, according to Petrobangla.
Presently, four IOCs have active PSCs either individually or under a joint venture in three shallow-water blocks for offshore exploration of hydrocarbons. ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly scouring for gas and oil in shallow-water blocks SS-04 and SS-09.
America's Chevron is active in exploring and producing natural gas in three onshore gas fields under onshore blocks 12, 13 and 14. Singapore's KrisEnergy is producing natural gas from Bangora Gas Field.
Bangladesh's offshore area has remained unexplored despite resolving its dispute with neighbouring countries but failed to yield any fruits in the last one decade while Myanmar and India have been producing gas from their areas (resolving its disputed areas) for many years.