State-owned hydrocarbon exploration and production agency Petrobangla wants to award offshore gas blocks to winning bidders by June so that they could start exploration works by January 2014.
Top Petrobangla officials disclosed this plan on February 7 while holding a pre-bid meeting with representatives of the aspirant international oil companies (IOCs) who purchased bid documents to participate in 4th round offshore bidding, titled ‘Bangladesh Offshore Bidding Round 2012’.
Official sources said so far 14 IOCs have bought the bid documents and representatives of 10 of them joined the pre-bid meeting arranged by Petrobangla aiming to make clarifications about different queries regarding the bid submission.
Petrobangla invited the bidding on December 17 last year setting a deadline for bid submission on March 18, 2013.
These IOCs which purchased bid documents are US-based Shell, ConocoPhillips, Chevron, ExxonMobil, Australia-based Santos, Carnavon Chiss, China-based CNOOC, India’s state-owned ONGC, Cairn India, Singapore-based Kris Energy; ENI, Statoil of Norway, Premier Energy of the UK, and BAPCO of Bahrain.
Of these, representatives fro Statoil, ExxonMobil, Premier Energy and ENI were not present at the pre-bid meeting.
Prime Minister’s Energy Adviser Dr Tawfiq-e-Elahi Chowdhury, State-Minister for Power and Energy Enanul Haque and Petrobangla Chairman Dr Hussain Monsur were present at the meeting.
Petrobangla Director (PSC) Imaduddin said most of the IOCs representatives wanted different clarifications of different issues mentioned in the model production sharing contract.
Sources said some of the IOCs wanted to learn that there is any possibility of extension of bid submission deadline. Petrobangla officials said they have no such plan as yet. Some of the IOCs expressed a little bit of dissatisfaction about the price of the deep sea water gas.
Bangladesh invited the latest international latest bidding for 12 offshore blocks in its maritime boundary following a verdict of the International Tribunal for the Law of the Sea (ITLOS) which disposed of a dispute with neighbouring Myanmar on maritime boundary in March 2012. Of 12 blocks, nine are located in shallow water while three others in deep sea.
The shallow-sea (SS) blocks are: SS-2, SS-03, SS-04, SS-06, SS-07, SS-08, SS-09, SS-10 and SS-11, of size between 4,500-7,700 sqkms, up to 200-mt depth of water. The three deep-sea (DS) blocks are: DS-12, DS-16 and DS-21.
In the current bidding round, the government has brought some major changes in the model production sharing contract (PSC) which will be the main basis of agreement with the winning bidders.
The gas price is set at US$ 5 per thousand cubic feet (mcf). At present, the average price is US$ 2.90 per mcf in the existing PSCs with the operating IOCs. In the last Bidding Round 2008, the price was US$ 4.5 per mcf.
The Model Production Sharing Contract (PSC) 2012 has made it mandatory for the IOCs to pay 37.5 percent corporate tax. Earlier, the IOCs enjoyed exemption of corporate tax and it was Petrobangla who had to pay the corporate tax on behalf of the IOCs.
The new bidding prohibits export of gas or oil in any form. Rather, if IOC discovers any oil and gas, it has to build transportation infrastructure as well to reach gas or oil to the country’s certain point as part of its development programme. There has been a provision in the new Model PSC to ensure 10 percent carried over interest in any block for government. This means, when a gas or oil field will be discovered, the government will get 10 percent share by its investment from that field. But in case of no discovery, the government does not need to bear any cost for this 10 percent stake.
As some of the IOCs wanted to know how the government would deal with the 10 carried over interest in a gas block, Petrobangla said it would take up the 10 percent interest as per PSC rule.