Bangladesh state-owned Petrobangla has sought permission to re-offer six shallow water oil and gas exploration blocks that attracted no bids in the county's recent bidding round, company chairman Hussain Monsur said Thursday.
Monsur said the new closing date and other details would be finalized once approval was received from the Energy Division of Ministry of Power, Energy and Mineral Resources, although the original terms regarding oil and gas prices, profit sharing ratios and cost recovery provisions would remain unchanged.
Bangladesh received bids for only three of the nine shallow water blocks it offered by the April 2 close, after extending the initial bid submission deadline of March 18. Monsur at the time attributed the lukewarm response to the lack of available primary data on the blocks.
US-based ConocoPhillips submitted an offer for block SS-07, and India's ONGC Videsh Ltd. for SS-04 and SS-09. The six to be re-offered are SS-02, SS-03, SS-06, SS-08, SS-10 and SS-11.
Petrobangla has completed its evaluation of the bids received and has sent its recommendation that the blocks be awarded to both bidders to the Energy Division for final approval.
Bangladesh launched its fourth bidding round for oil and gas exploration last December, offering 12 offshore blocks, nine in shallow and three in deep water.
After the deepwater blocks attracted little interest, Petrobangla suspended bidding while it sweetened the production sharing contract terms. It is awaiting final Cabinet committee approval for the changes, which have been endorsed by the Energy Ministry, and has yet to announce the new deadline for deepwater bids.
A Bangladeshi agent for an international oil company said Petrobangla may also have to also sweeten the terms for the shallow water blocks if it wants to attract more bids.
"Merely re-tendering the shallow water blocks will be not enough to attract IOCs," Farid Uddin said.
Under the current PSC model for shallow water blocks, state-owned Bangladesh Petroleum Exploration and Production, or Bapex, will take a 10% carried interest stake. The gas price is pegged to high sulfur fuel oil prices, with the floor price fixed at $100/mt and ceiling price $200/mt, which works out to around $5.50/Mcf before 37.5% corporate tax.
'COMPETITIVE WITH NEIGHBORS'
For deepwater blocks, Petrobangla intends to raise the wellhead price of gas produced, provide a "tax holiday" for the duration of the contract, allow direct sales of 50% of output to third parties -- bypassing Petrobangla's first right of refusal -- and raise the cost recovery limit to a maximum 70%/year, up from 55% earlier.
"We want to ensure that the terms and conditions of the PSCs for our deepwater blocks are competitive to those of neighboring countries India and Myanmar," Petrobangla's Director for PSC, Muhammad Imaduddin, said earlier.
Petrobangla also wants to raise the ceiling price of HSFO, to which gas prices are pegged, to $220/mt for deepwater blocks, compared with $200/mt for shallow water blocks, which would equate to a gas price of $6.50/Mcf when HSFO is $220/mt, he said.
In Bangladesh's previous 2008 bidding round, the floor price for HSFO was fixed at $70/mt and the ceiling price at $180/mt.
Bangladesh offered 28 offshore blocks in that round, but response was poor due to the country's maritime boundary disputes with Myanmar and India.
The country could award only parts of two deepwater gas blocks, DS-08-10 and DS-08-11, to ConocoPhillips, due to the disputes, and only after three years of negotiations. Tullow was awarded shallow water block SS-08-05 in the Bay of Bengal but a PSC has yet to be signed as it lies in disputed waters.