International oil companies (IOCs) participating in deep sea blocks bidding now can sell their share of gas to any third party within the country.
This right has been given to the IOCs through amending the present ‘Model Production Sharing Contract (PSC) 2012’ which the Cabinet Economic Affairs Committee today (Tuesday) approved in its meeting held with Finance Minister AMA Muhith in the chair.
A total of six amendments were made to the Model PSC 2012 to attract foreign oil companies in the bidding of Bangladesh hydrocarbon exploration.
The 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, exempting IOCs from paying 4 percent transportation tariff to Petrobangla in carrying gas within the country.
A new clause was introduced in the Model PSC which obliges the IOCs to transfer technology and recruit more Bangladesh workforce in their operation.
Earlier, foreign companies can sell their gas to only state-owned Petrobangla under the existing PSC.
Briefing on the issue, 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 invited tender 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 to their submit bids for deep sea blocks, terming the Model PSC’s conditions stiff and unsuitable.
Petrobangla then suspended the tender for deep sea blocks and initiated move for amending the conditions.
The Economic Affairs Committee also approved four other proposals. It approved Civil Aviation Ministry’s proposal to install a radar at Hazrat Shahjalal International Air Port and also implement a resort project in Cox’s Bazar under public private partnership (PPP).
Two unsolicited offers of two private companies were accepted by the committee for the two projects. But the Finance Minister said that finally the private sponsors will have to face competitive bidding although they will get bonus points while participating in the bidding process.
A hi-Tech Park project implementation proposal to implement under PPP was discussed in the meeting, but no decision was made considering the existing litigation in the project.