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The interim government is preparing to offer several onshore blocks in hilly regions to international oil companies (IOCs) under a proposed production sharing contract (PSC), aiming to enhance domestic natural gas production amid rising demand.
"We are planning to offer onshore Block-22A and Block-22B, along with several other hilly onshore blocks," Petrobangla Chairman Md Rezanur Rahman told The Financial Express on Saturday.
He said the long-anticipated onshore bidding round is likely to be launched within the next two months.
The Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) is currently reviewing a draft of the new Model Production Sharing Contract (MPSC), which was prepared and submitted by state-run Petrobangla.
The new MPSC aims to attract foreign investors by offering more competitive terms, developed in consultation with global energy consultancy Wood Mackenzie.
However, Mr Rahman did not disclose the exact number of blocks to be offered or specific pricing details.
Petrobangla's move comes nearly three decades after the last onshore bidding round, as the government seeks to ramp up hydrocarbon exploration in underexplored hilly regions to meet the surging demand for natural gas in industries, power plants, and other key sectors.
One major update in the new MPSC is its pricing mechanism. Under the proposed terms, the gas purchase price would be linked to 8 per cent of the dated Brent crude average over three months, with a price cap to mitigate extreme volatility.
A Petrobangla official said this could set the gas price at around $5.00 per million British thermal units (MMBtu), based on current Brent crude assumptions.
This price would align more closely with the cost of imported liquefied natural gas (LNG), which the country increasingly relies on due to stagnating domestic output.
In comparison, the 1997 MPSC linked gas pricing to high sulphur fuel oil (HSFO), with a fixed floor and ceiling. Under that structure, US-based Chevron currently receives $2.76 per MMBtu and Singapore's KrisEnergy receives $2.31 per MMBtu.
Petrobangla also purchases gas from its state-owned subsidiaries.
It buys gas at Tk 28 per Mcf (1,000 cubic feet) from Sylhet Gas Fields Ltd (SGFL) and Bangladesh Gas Fields Company Ltd (BGFCL), and at Tk 112 per Mcf from Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX).
By contrast, LNG from long-term suppliers QatarEnergy and OQ Trading International cost $10.66 and $10.09 per MMBtu, respectively, over the first seven months of the current fiscal year.
Officials said that Petrobangla is also working to harmonise exploration benefits across contracts to better attract IOCs, after the offshore bidding round in 2023 failed to draw interest.
That round offered 24 offshore blocks under terms that priced gas at 10 per cent of dated Brent, or around $7.08 per MMBtu based on current prices.
The last onshore bidding round in 1997 saw the award of four blocks -- Block-5, Block-7, Block-9, and Block-10.
At present, four IOCs are engaged in exploration activities in Bangladesh.
Chevron operates gas fields under Blocks 12, 13, and 14. KrisEnergy produces gas from the Bangora field in Block-9. ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly exploring shallow-water blocks SS-04 and SS-09.
To meet the shortfall, Bangladesh imports lean LNG from long-term partners RasGas of Qatar and Oman Trading International (OTI), as well as from the spot market.
Currently, the country's total gas output, including re-gasified LNG, stands at around 2,883 million cubic feet per day (mmcfd), against a demand of more than 4,000 mmcfd.
Azizjst@yahoo.com