Deep-sea blocks: New bidding schedule likely after Eid

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A new timeline is likely to be announced by state-owned Petrobangla by the end of the current month for the bidding process centring Bangladesh’s offshore blocks.

 

“We have received necessary approval from the government’s highest levels to announce a new schedule for the submission of bids by international oil companies (IOCs) for deep sea blocks,” said Petrobangla director (PSC) Imaduddin.

 

He noted that the new schedule will possibly be announced after the upcoming Eid vacation, which indicates the last week of October.

 

The Petrobangla suspended its process for international bidding in April this year following request from the IOCs to revise conditions attached to deep-sea hydrocarbon exploration.

 

The IOCs that bid successfully and go on to recover gas can now sell their share of gas to any third party within the country.

 

That follows the wholesale changes to the ‘Model Production Sharing Contract (PSC) 2012’, the key document setting the terms and conditions of the IOCs’ relationship with the government, on September 3.

 

A total of six amendments were made to the Model PSC 2012 to attract foreign oil companies into the bidding process.

 

The other amendments include raising gas price to US$ 6.5 per thousand cubic feet (MCF) from the existing US$ 5.5 per MCF and hiking the price by 2 percent every year for price adjustment; payment of corporate tax by Petrobangla instead of by IOCs; raising cost recovery portion to 70 percent from 55 percent; and exempting IOCs from paying 4 percent transportation tariff to Petrobangla for carrying gas within the country.

 

A new clause was introduced in the Model PSC which obliges the IOCs to transfer technology and recruit more Bangladeshis into their workforce.

 

Earlier, foreign companies could sell their gas to only state-owned Petrobangla under the existing PSC.

 

While amending the PSC, the Finance Minister said these amendments have been brought in line with the offers of neighbouring Myanmar and Sri Lanka, who are also inviting foreign oil companies to bid in their territories for oil and gas exploration.

 

Petrobangla initiated tenders in December last year to invite IOCs for hydrocarbon exploration in the country’s 9 shallow and 3 deep sea gas blocks.

 

But at one stage of the bidding, foreign companies expressed their reluctance towards submitting bids for deep sea blocks, terming the Model PSC’s conditions stiff and unsuitable.

 

Many of them requested the government to change the conditions of the PSC to facilitate their participation.

 

Petrobangla then suspended the tender for deep sea blocks and initiated the move for amending the conditions. Many view the subsequent changes as Petrobangla bending to the powerful IOCs’ wills.

 

Imaduddin said they hope the aspirant IOCs will get a good lead time to submit their proposals for the 3 deep sea blocks.

 

He noted that soon after the announcement of the new tender schedule, most Western countries will break for Christmas vacation in the Western countries, where most of the IOCs are headquartered.

 

Secondly, Bangladesh itself will be entering the election period soon, and it will last until the end of January. So, the IOCs could get enough time to take preparation for submission of their bids, if they chose to wait till the election was over.

Source: UNBConnect

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