International companies seek higher price for their gas output from Bangladesh blocks
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
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
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, email@example.com
--Edited by Geetha Narayanasamy, firstname.lastname@example.org