The Financial Express

Eight global consultants express interest in upgrading offshore model production sharing contract

| Updated: November 22, 2021 17:29:07

Eight global consultants express interest in upgrading offshore model production sharing contract

Eight global consultants have submitted expressions of interest (EoIs) to carry out the job of upgrading the country's offshore model production sharing contract (MPSC), paving the way for launching the long-awaited bidding round for hydrocarbon exploration.

The firms include Wood Mackenzie, PricewaterhouseCoopers (PwC), Project Design Consultant (PDC), IHS Markit & RPS Group, said a senior official of Petrobangla - the state-owned company that explores, produces, transports and sells oil, natural gas and other mineral resources.

Petrobangla will select a potential one among them on the basis of their bids to update the terms and conditions of the country's existing offshore MPSC 2019.

The selected consultant's job will be to make the MPSC 2019 more attractive, competitive and internationally acceptable for oil and gas exploration and development, he said.

The existing MPSCs for both onshore and offshore were prepared in 2018 and approved by the cabinet committee on economic affairs in 2019.

But the global spread of deadly coronavirus after 2019 changed the global economic scenario especially of the energy sector where the demand of LNG (liquefied natural gas) soared rapidly as the clean fuel soared significantly.

So, updating the MPSC is necessary to lure the interested international oil companies (IOCs) under the post-Covid scenario, said the Petrobangla official, justifying the need for its re-visit.

Officials said the government had a plan to float an international tender to carry out hydrocarbon exploration in offshore fields on September 15, 2020.

The announcement to float the bidding round was planned to come on March 17, 2020 in celebration of the birth centenary of Bangabandhu Sheikh Mujibur Rahman.

The deadline for receiving bids from the IOCs was planned for March 10, 2021.

The signing of the PSCs with the bid-winning IOCs was planned by May 26, 2021.

Petrobangla was to launch the bidding round offering offshore blocks adjacent to gas-rich blocks of Myanmar, said the Petrobangla official.

Under the existing MPSC 2019, the gas price for deep sea blocks was set at around $7.26 per MMBtu (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 MPSC.

Petrobangla had floated the last bidding round nine 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.

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

Bangladesh currently has a total of 26 open blocks in offshore areas - of them, 11 are located in shallow water and the remaining 15 are in deep water.

The country's natural gas output is currently hovering around 3,000 million cubic feet per day (mmcfd) of which 641 mmcfd is regasified imported LNG, according to Petrobangla statistics as on November 20, 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.

US's Chevron is active in exploring and producing natural gas in three onshore gas fields under onshore blocks 12, 13 and 14.

Singapore's KrisEnergy is producing natural gas from the Bangora gas field.

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