State-owned oil company Petrobangla is considering reviewing the production sharing contract as it failed to attract any international companies in the bidding floated to explore offshore gas.
Monday was the last day for the submission of bidding documents. The submission time was extended by three months in September, after the incumbent interim government assumed power.
鈥榃e will try to find out by a special committee the reasons behind the disinterest,鈥� said Zanendra Nath Sarker, chairman, Petrobangla.
Recommendations will be made based on the finding whether the PSC particularly was not attractive enough, he said.
He said that the change in political landscape could leave international oil companies undecided about engaging in exploratory activities.
Seven companies had procured tender documents after the tender was floated in March.
The oil companies were US-based companies Exxon Mobil and Chevron, Thailand-based PTTEP, Singapore-based Chris Energy, India-based ONGC, Japan-based Inpex, and China-based CNOOC International Limited.聽
After floating tender, Bangladesh had urged global companies to participate, saying that they offered one of the world鈥檚 most lucrative deals.
Energy experts had also agreed with the government about the Production Sharing Contract of 2023 being too profitable for private investors, offering many concessions and tax holidays.
The PSC sought minimum bank guarantee and allows transfer of shares. Investors could also bid for one or more blocks alone or with other companies under the PSC.
The bidding covered Bangladesh鈥檚 all 24 offshore blocks, including the nine in the shallow water. The shallow blocks are 3m to 200m deep while the deep sea blocks are ranging from 201m to 2000m deep.
The PSC linked the gas price to oil price, meaning that the earlier provision of any cap on the price was removed.
For ensuring a faster return on investment, the PSC offered 75 per cent cost recovery. The investors would not have to pay any royalty either unlike in other countries such as neighboring Myanmar and Thailand.
The UK-based Wood Mackenzie, a multinational research and consultancy group, made the recommendations based on which the 2023 model PSC was updated.
Bangladesh has so far held seven biddings since 1974 for gas and oil exploration, with the highest number of foreign companies entering production sharing contracts in 1974.
Bangladesh has drilled 97 wells, finding gas in 29 wells. Bangladesh鈥檚 current production capacity is about 2100mmcfd against a demand of about 5000mmcfd.
After a prolonged period of inactivity over exploration, the government passed the 2023 PSC in the election year, months before it assumed power for the fourth straight term.
American oil giant ExxonMobil had reportedly expressed its interest in exploration in all offshore blocks in Bangladesh.
An enormous gas exploration potential opened up between 2012 and 2014 after Bangladesh won over 20,000sq km in the Bay of Bengal following the settlement of maritime disputes with India and Myanmar.
Immediately after losing its maritime dispute with Bangladesh, Myanmar awarded 20 offshore blocks, mostly in the Rakhine basin off the Arakan coast, south of Teknaf, to international oil companies by 2014.
Of 26 open offshore blocks, Bangladesh has PSC for two shallow sea blocks 鈥� blocks SS-04 and SS-09, which ONGC Videsh Ltd and Oil India Ltd are jointly exploring.
