Petrobangla raises gas price to lure IOCs to explore for deposit
Published : Thursday, 8 August, 2019 at 12:00 AM Count : 800
Petrobangla, the state-owned oil and gas corporation has increased gas price to US$ 7.25 per Mcf plus 2 per cent per year from $6.50 to attract the International Oil Companies (IOCs) to explore country's exclusive economic zone to add fresh gas to its reserve.
In the last amendment, an IOC would sell around 50 per cent of the gas produced to Petrobangla at $7.25 per Mcf (1,000 cubic feet) plus 2 per cent increase per year, instead of $6.50. The amendments also exempted IOCs from paying transport tariffs and corporate taxes, Petrobangla sources said.
The last model PSC was adopted in 2012.
The Cabinet Committee and the Energy Division has approved the new amendment in recent days under which the Petrobangla will go for next bidding round to explore 11 blocks in shallow and 15 blocks in deep sea areas in the Bay of Bengal.
"We failed to attract the IOC's in our last bidding round, giant energy players did not take part in the offshore bidding rounds in 2008, 2012 and 2016 saying that it was not a lucrative package, so we engaged foreign consultant for drafting the PSC model," a senior official of the Petrobangla told the Daily Observer on Wednesday.
According to him Petrobangla has failed to attract IOCs into the deep sea blocks as they do not find this lucrative. So, Petrobangla increased the price.
Prof Dr M Tamim of the Department of Petroleum and Mineral Resources Engineering at the Bangladesh University of Engineering and Technology (BUET) said the oil and gas industries have faced several ups and downs in last decades, the price is one single issues, the other issues are related with the operation of the IOCs.
"Obviously pricing is the main factor," he added. Pricing of hydrocarbon is a complex issue. One has to consider a lot of things.
Petrobangla has updated the draft of the model production sharing contract (PSC) to launch fresh bidding for both onshore and offshore blocks but they (corporation) don't have any specific date line of it, actually they do not have any clear idea in this regard.
Petrobangla had earlier submitted a draft of the model contract to the Ministry in June 2017.
The country is currently dependent on onshore fields for its entire natural gas output.
The country's overall natural gas production is hovering at around 3,000 million cubic feet per day (mmcfd), including around 300 mmcfd of re-gasified LNG against the demand for over 3,300 mmcfd.
The short supply of natural gas has pushed the government to ration energy supplies to industries, power plants and fertiliser factories for around a decade and pushed the government to start importing expensive LNG from April 2017.