Bangladesh mulls 10% gas price hike in bidding round for 12 offshore blocks
Dhaka (Platts)--27Feb2013/549 am EST/1049 GMT
Bangladesh is considering a 10% hike in the price for gas produced at 12
offshore blocks being offered in its latest bidding round after prospective
bidders deemed the current price too low, a senior Petrobangla official said
State-owned Petrobangla has proposed the 10% hike in a request to the
Energy and Mineral Resources Division of the Ministry of Power, Energy and
Mineral Resources, the source said.
This follows a pre-bid meeting on February 7 in which prospective
bidders argued that the gas price set in the model production sharing
contract, or MPSC, was too low. The meeting was attended by officials from
more than a dozen major international oil companies including US-based
Chevron, ConocoPhillips and ExxonMobil, Anglo-Dutch Shell and China's CNOOC.
The current MPSC pegs the gas price to high sulfur fuel oil prices, with
the floor price for HSFO fixed at $100/mt and the ceiling price at $200/mt.
This equates to around $5/Mcf before corporate tax.
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In its proposal to the ministry, Petrobangla argues the ceiling price
for HSFO should be $220/mt, which would equate to a gas price of $6/Mcf
before corporate tax, the official said.
Bangladesh's previous bidding round was in 2008, for which the floor
price for HSFO was fixed at $70/mt and the ceiling price at $180/mt, equating
to a gas price of around $4.50/Mcf before corporate tax.
Petrobangla launched the latest bidding for 12 oil and gas blocks --
nine in shallow and three in deep water -- on December 9, 2012, with the
deadline for submissions March 18.
In the 2008 bidding round, gas exports via pipeline were banned but LNG
exports were allowed. In the latest round, all gas exports are prohibited but
companies will be able to sell their gas directly to third parties in the
domestic market without going through Petrobangla, which will retain first
right of refusal.
The country expects successful bidders to begin exploration by year end.
--Mohammad Azizur Rahman, email@example.com
--Edited by Wendy Wells, firstname.lastname@example.org