Petrobangla finalises MPSC linking gas prices to Brent 

Petrobangla has finalised the Offshore Model Production Sharing Contract (MPSC) 2025 introducing gas pricing mechanism indexed to Brent crude oil, pipeline cost recovery, and work obligations to attract International Oil Companies (IOCs).

"We are taking all preparations for inviting bids for both onshore and offshore exploration, but the final decision will be made by the next elected government," EMRD Secretary Mohammad Saiful Islam told media.

The new proposal has been prepared, as per the recommendations of a Scottish consultancy firm, Wood Mackenz in 2022, to align Bangladesh's terms with international benchmarks.

Petrobangla, has submitted the draft to the Energy and Mineral Resources Division (EMRD) for approval. 

Under the proposal, gas from deep-sea blocks will be priced at 11 per cent of Brent's three-month average, with a $70-$100 per barrel floor and ceiling. Shallow sea blocks will receive 10.5 per cent of Brent, while onshore exploration will fetch 8% on plain land and 8.5 per cent in hilly areas.

The 2025 framework marks a significant shift from the 2023 model, which offered a flat 10 per cent of Brent (capped at $100) but failed to generate investor interest - only seven bid documents were purchased and none submitted amid political uncertainty. Previously, ceiling prices were fixed at $5.6 per MMBtu for shallow sea gas and $7.26 for deep sea blocks.

The draft also retains full cost recovery for pipelines and facilities, with tariffs to be set under petroleum sales agreements. To accelerate exploration, it introduces stricter minimum work obligations, requiring contractors to undertake extensive 2D and 3D seismic surveys soon after contracts take effect. 

Another notable update is the replacement of the LIBOR benchmark with the SOFR (Secured Overnight Financing Rate) for payment terms.

"The gas sector in Bangladesh is heading toward disaster within four to five years. Supplies will fall rapidly, and without alternatives, even households will struggle to use burners," Prof. M. Tamim, energy analyst and Vice Chancellor of Independent University (IUB), has said on Thursday.

He noted that Bangladesh spends about $13 billion annually on energy imports (LNG), weighing heavily on the economy, but there is no progress to explore local gas since.

Currently, about 2300 mmcfd gas is being produced from 22 gas fields in the country, while about 700 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1000 mmcfd.