Bangladesh defers offshore bidding round to mid-Dec as it awaits ministry nod
Dhaka (Platts)--23Nov2012/117 am EST/617 GMT
Bangladesh has again deferred its offshore bidding round to mid-December
from November as state-owned Petrobangla has not received the final go-ahead
from the energy ministry, Petrobangla Chairman Husain Monsur said Friday.
"We are now waiting for a date from the Energy and Mineral Resources
Division of the Ministry of Power, Energy and Mineral Resources to float the
international tender," he said.
Prime Minister Sheikh Hasina, who is also in charge of the energy
ministry, is set to give the final seal of approval, Monsur said. But as she
has been away from the country recently, there was a delay of, he added.
Petrobangla has completed all the formal procedures to launch the
bidding round in mid-December, said the Petrobangla chief.
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International Oil Companies are showing growing interest to take part in
the country's offshore bidding for hydrocarbon exploration in the Bay of
Bengal, Petrobangla Director for production sharing contract Muhammad
Imaduddin said. Brazil's Petrobras, Norway's Statoil, Singapore's Kris Energy
and Indian Oil and Natural Gas Corp. Ltd., are among the companies which have
held talks with Petrobangla to take part in the bidding, he added.
Australian Santos, the operator of the country's sole producing offshore
Sangu-11 well, US-based ConocoPhillips, the winner of two gas blocks in the
previous 2008 offshore bidding, the China National Offshore Oil Corp. and
Sinopec are also eying to take part in the next offshore bidding, said an
Bangladesh's Cabinet Committee on Economic Affairs earlier approved the
model production sharing contract to be inked with bid winning companies,
Platts reported earlier.
Bangladesh finalized the proposed PSC allowing a 72.41% hike in the
sales price of gas produced from the blocks on offer.
Gas prices in Bangladesh are pegged to high sulfur fuel oil prices. In
the planned 2012 round, the floor price for HSFO has been raised to $100/mt
and the ceiling price to $200/mt, which works out to a gas price of around
$5/Mcf based on a proposed pricing formula.
In the 2008 bidding round, the floor price for HSFO in the formula was
fixed at $70/mt and the ceiling price at $180/mt. This worked out to a gas
price of around $2.90-2.95/Mcf.
Bangladesh will offer a total 12 offshore gas blocks -- nine in shallow
water and three in deep water -- in the Bay of Bengal in the upcoming round,
scheduled for the first week of October.
This will be the country's fourth bidding round. Earlier ones were held
in 2008, 2001 and 1997.
Dhaka is also planning to offer two shallow water fields -- Kutubdia and
Teknaf -- under a "special package" for exploration in this round. The two
fields will be tagged with two of the 12 blocks, so the companies that are
awarded the license will have to explore the fields, Imaduddin said.
As part of the special package for the fields, license holders will have
to give state-owned Petrobangla an additional 5% of "profit-gas" to be
produced, on top of Petrobangla's regular profit-sharing structure, he said.
As per the terms of the PSC, Petrobangla's regular profit-sharing
structure is as follows: the company will receive no less than 55% of profit
if gas production is up to 75,000 Mcf/d; no less than 60% if production is
76,000-150,000 Mcf/d; no less than 65% if the output is 151,000-50,000 Mcf/d;
and no less than 70% if output is 251,000-400,000 Mcf/d; no less than 75% if
output is 401,000-600,000 Mcf/d; and no less than 80% if output is above
Other features of the PSC include full repatriation of profits; no
signature bonuses or royalties; no duties for equipment and machinery
imported for operations during the exploration, development and production
phases; 100% cost recovery; and production bonuses, Imaduddin said.
Gas exports would be prohibited under the new bidding round, he said. In
the 2008 bidding round, gas exports via pipeline were banned but LNG exports
were allowed, he said.
Exploration leases for shallow water blocks would be seven years in the
upcoming bid round, down from eight years, and for deepwater it would be
eight years, down from nine years, Imaduddin said.
Companies would also be able to sell the gas produced directly to third
parties in the domestic market, without going through Petrobangla but the
latter will have first right of refusal, he said.
--Mohhamad Azizur Rahman, firstname.lastname@example.org
--Edited by Haripriya Banerjee, email@example.com