Review of PSC-2023: PM meets energy div officials on May 16

Prime Minister Sheikh Hasina, the line minister of Energy, Power and Mineral Resources will sit with the Energy Division officials for the final review of the draft Model Production Sharing Contract (PSC)-2023 on May 16.

The Energy Division has already okayed the draft on May 8, at a meeting at the Energy Division chaired by the Secretary of the Ministry that includes several benefits, including tax exemption and making the gas price US$10 per MMBTU to the companies coming to explore oil and gas.

"Petrobangla has drafted the new model PSC offering a larger output share and increasing the gas price to attract IOCs in the local fields. However, Bangladesh's share in the "profit gas" also proposed to cut down from 40 to 70 per cent from the previous 55 to 80 per cent in the previous PSC," according to the Energy Division.

However, the Model PSC-2019 said that the gas price in the deep sea is $7.25 per MMBTU.

According to the Energy Division, if the Prime Minister okays the draft PSC, then the Petrobangla will take step to discuss the 'offer of the Texas-based international oil and gas company ExxonMobil.

"ExxonMobil has shown interest in carrying out oil and gas exploration in Bangladesh's deepwater blocks," Petrobangla Chairman Zanendra Nath Sarker earlier told the media.

Energy Division official said the "the proposal is under serious consideration."

In its proposal ExxonMobil wants direct negotiation with Petrobangla to explore all 15 blocks in deep sea of the Bay.

In its three folders plan it said it wants to complete PSC negotiation and 2D seismic survey in two years. Later, it intends to complete 3D seismic data acquisition, processing and interpretation on high-graded blocks in three years. And finally, it plans to start drilling exploration wells, which will continue for three years.

If awarded, it will be a big deal for Bangladesh as ExxonMobil will have to invest at least around $3.0 billion during the initial exploration period of around five years to delineate new reserves over the first five years of its hunt.

On March 30, a meeting, chaired by Finance Minister AHM Mustafa Kamal, on this issue was held at the secretariat. State Minister for Power, Energy and Mineral Resources Nasrul Hamid, EMRD Secretary Md Khairuzzaman Mozumder and other senior officials were present.

ExxonMobil also wished to work directly with Norwegian Survey Company TGS and US firm Schlumberger. They are now conducting the multi-client survey in the Bay of Bengal to acquire a denser grid of 2D data during the initial acquisition phase.

The country's opportunity to explore hydrocarbon resources in the Bay of Bengal widened after it resolved its longstanding maritime boundary disputes with Myanmar in 2012 and with India in 2014, unfortunately, Bangladesh's offshore area remained unexplored despite the settlement of its dispute.

Hydrocarbon Unit, a wing of the Energy and Mineral Resources Division in its book "Energy Scenario of Bangladesh 2019-20" has said that the estimated proven plus probable recoverable reserve of Bangladesh was 40.09 Tcf (Trillion Cubic feet). As of June 2020, a total of 17.79 Tcf gas has already been produced leaving only 12.26 Tcf recoverable reserve in proven plus probable category.

Earlier, the Posco-Daewoo Corporation, a joint venture of the two Korean firms, had inked the PSC in December 2016 with the Petrobangla under the Speedy Supply of Power and Energy (Special Provisions) Act 2010.

Posco later acquired Daewoo interests to become lone stakeholder of the deep-sea block DS-12.

Later, Posco authorities had sought an extension of its production-sharing contract (PSC) with higher 'commercial terms', but Petrobangla refused to amend the deal.

Petrobangla had earlier awarded the DS-12 block along with two other deepwater blocks--DS-16 and DS-21--to a joint venture of ConocoPhillips of the United Sates and Norwegian Statoil under the previous 2012 bidding round.

But they did not inked the deal on 'non lucrative' one.

Earlier, another US Company, ConocoPhillips relinquished operations from two separate deepwater blocks-- DS-08-10 and DS-08 -11 -- on December 15, 2014 after carrying out 2D seismic surveys because of 'poor' fiscal terms. It had inked PSCs for carrying out oil-and gas-exploration activities in these two deepwater blocks in June 2011.

Gas production has increased impressively in Bangladesh, from 392 Bcf in 2002 to 704 Bcf in 2009-10. Which is presently around 4,100 mmcf, however, the majority of this gas is produced by international oil companies (IOCs), and predominantly operating under production sharing contracts (PSCs) that were awarded in four rounds of negotiations and bidding.

Prof Dr Badrul Imam, teacher of DU Geology Department said, "We are exploring the eastern part of the country, we have discovered gas fields there which covered only one third of total geography of Bangladesh.  And we are importing LNG without taking any potential steps to explore our onshore and offshore areas which are around 90 per cent of our total areas, it is still unexplored."

Dr M Tamim, professor of petroleum and mineral resources engineering of the Bangladesh University of Engineering and Technology (BUET), said Bangladesh's current recoverable gas reserves of 16.36 Tcf are set to be exhausted within the next decade if no new gas field is discovered.

"We have potential gas reserves in offshore blocks. To tap those, there is no option but to attract IOCs to carry out exploration there," he said.

Currently, the government has PSC for two shallow sea blocks - blocks SS-04 and SS-09, which ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly exploring.

Of the total onshore blocks, only four are awarded to IOCs. USA oil giant Chevron has been exploring and producing natural gas in three onshore locks - 12, 13 and 14 - while Singapore's KrisEnergy is active in block-9.