Luring IOCs with bigger bets

Notwithstanding inordinate delay, the Bangladesh Petroleum Corporation (BPC) has, finally, started moving in the right direction to lure international oil companies (IOCs) into the job of exploring hydrocarbon (HC) in the country's offshore blocks. It has tried to make the latest draft of model product-sharing contracts (PSCs) as attractive as possible. The redrawn PSCs would benefit the IOCs more than the first party, Bangladesh. The latter would be under an obligation of buying gas from IOCs according to a cap-free price mechanism, meaning the prices would be adjusted with those in the international market.

Besides, the IOCs, in the event of successful exploration, will be at liberty of exporting gas after meeting the domestic demand. Under the pricing formula incorporated into the model PSCs, the BPC will buy gas from the IOCs at around three times the current price. Then again, the government share in "profit gas" has also been brought down to 40-70 per cent from the previous offer of 55-80 per cent. Many might find the remodelled PSCs more biased towards the IOCs. Some previous draft PSCs offering far lower benefits for the IOCs had triggered street protests by a section of rights organisations. This time, however, none has come out in the street or media protesting the latest draft for understandable reasons. The country has been paying through its nose as fuel prices have skyrocketed. Many gas-based industries are either closed or running at reduced capacity for the gas-supply shortage. 

Undeniably, successive governments have dragged their feet on the issues of hydrocarbon exploration in offshore blocks that had been demarcated long ago. The BPC continued with the job of drafting and redrafting the model PSCs but without any results. However, reasons such as the lack of interest of the IOCs in doing the highly cost-intensive exploratory job without knowing the potential and the depressed oil price situation in the international market played a role. What the potential IOCs wanted was the seismic survey data and those were not available. A Norway-US joint venture (JV) company got the job of surveying in 2019, but it started the survey work only in the second week of this month. Its contract is supposed to expire in March next. The JV will conduct a survey of 21 offshore blocks within the sovereign territory of Bangladesh, covering an area of 81,000 square kilometres with a depth ranging from 20 metres to 2,500 metres. It might take a long time to complete the survey and prepare the necessary data for the IOCs.

As the country is going through a severe energy crunch, the failure to tap the potential gas reserves within its maritime boundary has raised deep frustration among the people. The disappointment has become more intense as two close neighbours have been exploiting substantial volumes of gas from their respective offshore blocks. Experts are saying that the gas reserves discovered so far would be exhausted within the next seven to eight years. They are also highly optimistic about hitting the gas in the country's offshore blocks both in shallow and deep waters. Given the global energy situation, the country is left with no option but to go for massive HC exploratory works without any further delay.