The Financial Express

Offshore bidding round on hold

| Updated: February 16, 2021 17:05:12

Offshore bidding round on hold

The government prefers delaying further to launch a fresh bid round to offer offshore blocks fearing lukewarm response from the potential global players due to the coronavirus pandemic.

State-run Petrobangla prefers to see the impact of the coronavirus pandemic on the global energy sector before launching the bid round, said a senior Petrobangla official.

Global oil and gas exploration companies might not be interested to take part in the competitive bidding to carry out 'expensive' offshore exploration jobs during the current coronavirus pandemic, he added.

Although oil and gas prices in the international market rebounded and were witnessing an upward trend, he said, Petrobangla is not yet ready for launching the bid round.

Petrobangla sources, however, could not say when the next offshore bidding round will take place.

Shelving the exploration plan, however, means the country's dependence on imports of fuel especially expensive LNG, or liquefied natural gas, might increase, industry insiders said.

Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) had a plan to float the tender on September 15, 2020.

The announcement to float the bidding round was planned to come on March 17, 2020 and the deadline for receiving bids from international oil companies (IOCs) was planned for March 10, 2021.

Signing of production sharing contracts (PSCs) with bid winning IOCs were planned by May 26, 2021.

Under the plan, state-run Petrobangla was to launch the bidding round offering offshore blocks adjacent to gas-rich blocks of Myanmar.

Sources said Bangladesh's deep sea turned 'idle' in terms of hydrocarbon exploration as the maiden deal with South Korean Posco International turned void recently.

With the exit of Australian Santos and Kris Energy from shallow-water block SS-11, exploration activities in shallow water block also squeezed further that too at a snail's pace, insiders said.

Petrobangla floated the last bidding round eight years back in 2012 through which shallow-water blocks and one deep-water block were awarded to contractors.

But not a single exploratory well was drilled by the contractors by this time.

Petrobangla rather extended the tenure of PSCs for each of the contractors by two years each.

To allure the IOCs for the planned bidding round, Petrobangla had revised upward the price of natural gas in the latest model production sharing contract (MPSC).

And as per the model PSC 2019, the gas price for deep sea blocks was set at around $7.26 per MMBtu, or million British thermal unit, up by 11.69 per cent from the previous MPSC for the deep sea blocks.

The offshore gas price was set to increase every year by 1.5 per cent from the date of first gas production, according to the model PSC.

Currently, Bangladesh has a total of 31 open blocks for offer in the next bidding round. Of them, nine blocks are located in onshore areas, 14 in deep sea, and eight in shallow sea areas.

The country's natural gas output is hovering around 2,886 million cubic feet per day (mmcfd), of which 400 mmcfd is re-gasified imported LNG, according to Petrobangla statistics as on February 10, 2021.

The entire local production comes from onshore gas fields.

Currently, four IOCs have active PSCs either individually or under a joint venture to explore three shallow-water blocks for offshore exploration.

ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly exploring shallow-water blocks SS-04 and SS-09.

The country has not offered any onshore oil and gas blocks since 1997.

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