Dhaka (Platts)--8Feb2013/519 am EST/1019 GMT

International oil companies are seeking higher prices for their gas output from Bangladesh's offshore blocks offered in the latest bidding round, Petrobangla Chairman Hussain Monsur told Platts Friday.

The IOCs argued Thursday in a pre-bid meeting in Dhaka that the gas price offered in the model production sharing contract, or MPSC, for the 2012 offshore bidding round was not attractive, Monsur said.

In the MPSC of the 2012 offshore bidding round, the gas price was pegged to high sulfur fuel oil prices, with the floor price for HSFO fixed at $100/mt and the ceiling price at $200/mt. The price works out to around $5/Mcf without the corporate tax, which will be paid by the contractors.

"For shallow water gas blocks, the gas price will be 100% of the HSFO price ex-Singapore, with biddable discounts," Petrobangla Director (PSC) Muhammad Imaduddin said.

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"For deep water gas blocks, the gas price will be 110% of the HSFO price ex-Singapore, with biddable discounts," he added.

Bangladesh's previous bidding round was in 2008, and for that the floor price for HSFO was fixed at $70/mt and the ceiling price at $180/mt. The price under the 2008 bidding round worked out to around $4.5/Mcf without the corporate tax.

Petrobangla during the meeting on Thursday said the successful bidders would likely begin exploration in the offered blocks by January 2014.

"We are eyeing to award the offshore gas blocks by June-July this year to ensure that exploration starts in the new blocks by January next year," Monsur said.

The IOCs that participated in the pre-bid meeting include US-based Chevron, ConocoPhillips and ExxonMobil; Australia's Santos and Carnarvon Petroleum; Anglo-Dutch Shell; China's CNOOC, India's state-owned ONGC and Cairn India, the Singapore branch of KrisEnergy; Italy's ENI; Norway's Statoil; UK's Premier Energy; and Bahrain's Bapco.

Petrobangla declared the bidding round open on December 9, 2012, and the deadline for bid submissions is March 18, 2013.

It has put on offer a total of 12 dispute-free oil and gas blocks -- nine in shallow waters and three in deep waters -- under the country's fourth round of bidding called 'Bangladesh Offshore Bidding Round 2012.'

The shallow-water gas blocks put on offer are SS-02, SS-03, SS-04, SS-06, SS-07, SS-08, SS-09, SS-10 and SS-11. The deep-water gas blocks offered are DS-12, DS-16 and DS-21.

State-owned Bangladesh Petroleum Exploration Company, or Bapex, will take a 10% carried interest stake in all the shallow water gas blocks.

In the 2008 bidding round, gas exports via pipeline were banned but LNG exports were allowed.

In the latest bidding round, however, gas exports have been prohibited. The IOCs would 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, Imaduddin said.

The blocks have been put on offer in line with the March 14 verdict from the International Tribunal for the Law of the Sea, which settled the maritime boundary dispute between Bangladesh and neighboring Myanmar, said the Petrobangla chief. None of the blocks disputed with neighboring India has been offered in the bidding round, he added.

Bangladesh re-mapped its blocks before launching the 2012 bidding round.

--Mohammad Azizur Rahman, newsdesk@platts.com
--Edited by Geetha Narayanasamy, geetha_narayanasamy@platts.com

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