Bangladesh (commonwealth) _None of the seven international oil and gas corporations that bought tender paperwork for gas exploration in the Bay of Bengal turned them in by yesterday’s deadline.
Before being extended by three months, the deadline was originally set for September 9. However, no business showed up with the paperwork.
The Daily Star received confirmation of the situation from Petrobangla Chairman Zanendra Nath Sarker. Meanwhile, he revealed that two other businesses have purchased seismic survey data instead of tender documents, which provide information about an area’s potential for oil and gas exploration.
During the 15-year reign of the previous government, there was also much discussion about gas exploitation in the Bay of Bengal. According to insiders, the previous administration was hesitant to explore and instead prioritized importing expensive LNG.
On March 10 of this year, Petrobangla issued a tender inviting foreign oil corporations to investigate Bangladesh’s maritime territory, following the resolution of maritime border conflicts with India and Myanmar in 2012 and 2014. This is the first significant attempt to use the sea’s natural resources.
All 15 deep-sea blocks and nine of the eleven shallow-sea blocks were open to the public bidding procedure.
Only international firms with experience producing at least 15,000 barrels of oil or 150 million cubic feet of gas per day (mmcfd) offshore were eligible to participate.
Multinational corporations received a larger profit-sharing portion under the new tender’s model, a “production sharing contract” (PSC), making it more attractive than earlier agreements. This time, we set the previously fixed gas price at 10% of the current price of Brent Crude, a global benchmark for oil prices.
The full repatriation of revenues, the absence of a signature bonus or royalty, and the setting of oil prices in accordance with the fair market value that is now in place in South and Southeast Asia are further alluring aspects of the offer.
Petrobangla completed a PSC in 2019 but chose not to release the tender, claiming that international businesses were not interested.
Before releasing the tender notice this time, the government conducted a two-dimensional, multi-client seismic study; the absence of this survey also contributed to foreign corporations’ lack of interest in previous attempts.
The news surprised renowned geologist Prof. Badrul Imam. He added that the Bay of Bengal is a “textbook example” of an area with enormous gas potential. “I don’t know if there was any weakness in our campaigning or if there is any lack in promotional packages or the advertising process,” he said.
According to Sarker, the chairman of Petrobangla, the state-owned energy business must investigate why the companies purchased the tender paperwork but failed to submit any.
He stated that Petrobangla must participate in both formal and informal talks with the corporations. After identifying the process’s shortcomings and discussing them with government officials, we will re-examine the tender documents. Sarker further stated
Additionally, the PSC includes an early cost recovery provision and will modify the pricing to align with the Brent index. Ten percent of Brent’s crude will be the price. Six international companies expressed interest in exploring gas in Bangladesh after independence, but they withdrew due to a lack of data.
No company participated in the auction that followed the 1988 PSC. Following the PSCs in 1993, 1994, and 1998, very few businesses have extracted or are currently extracting gas from onshore fields after exploration.
Following the Model PSC 2008, the American multinational business ConocoPhillips negotiated a contract for exploration in two offshore blocks; however, the company abandoned the agreement in 2015 due to unfavorable terms.
The Oil and Natural Gas Corporation Videsh of India started construction in two blocks after the 2012 Model PSC, but the project has experienced significant delays. Santos Ltd. of Australia and KrisEnergy of Singapore received four blocks after the 2012 PSC; however, they exited after assuming losses.
In 2016, Posco Daewoo Corporation of South Korea discovered gas and suggested raising prices. The government refused to approve the hike because it fell outside the scope of the contract. The business later pulled out.
In 2020, a bidding round according to Offshore Model PSC 2019 was planned, but the COVID-19 scenario prevented it from happening.
