State-owned oil and gas exploration company Petrobangla has failed to attract international oil companies (IOCs) to explore energy resources in Bangladesh's onshore and offshore blocks, despite revising the documents twice and extending the bid submission deadline once in line with the IOCs' requirements.
"Six companies initially purchased the bid. To make it more competitive, we extended the bid submission date by three months… unfortunately, no company responded. We closed the process today (9 December noon). However, we will soon review the situation and fix up the work plan," a senior official of the bidding committee told the Daily Observer on Monday with frustration.
Another perspective from sources close to the IOCs suggests that political unrest has also been an impediment to foreign investment. Additionally, the decline in oil prices in the international market might have affected the bidding round.
Petrobangla floated the international tender on March 10 with a total of 24 offshore blocks -- 15 in deep sea and nine in shallow sea -- on offer for exploration leases. The bidding process was launched under the banner 'Oil and Natural Gas Exploration under Bangladesh Offshore Bidding Round 2024'.
To make the Production-Sharing Contracts (PSCs) more lucrative, Petrobangla waived the requirement for IOCs to submit any signature bond, and firms were not charged import duties for machinery and equipment necessary for exploration and drilling, nor were they liable for income tax.
Moreover, the gas price for the offered blocks will be tagged to the price of Brent crude on the international market so that the gas price remains flexible in line with global oil-price indices, which is favourable to the IOCs.
"We are working here to extract more gas from our fields. In the last decade, Bangladesh launched only one bidding round in 2017, and that was only for three deep-water blocks," according to Petrobangla data.
This time, we received six bids. During the previous deadline for submitting bids, September 9, it was extended until December 9 following requests from some potential IOCs.
Later, a promotional seminar was held on May 8, where more than a dozen international oil companies from the U.S., Europe, and Asian countries showed interest in joining the bidding, but what they did remains unclear, the official asked.
A good number of them, including reputable ones, were expected to bid for the 15 deep-sea blocks (DS-08 to DS-22) and nine shallow-water blocks (SS-01 to SS-11).
The pricing modalities were the same for both shallow and deep-water blocks. Petrobangla will purchase the explored IOC gas at the Brent crude-linked rate, which will have no capping.
A capping-free price means Bangladesh will have to purchase the gas extracted by the contractors at a rate as high as it goes or as low as it slips. The foreign firms will also have the liberty to export natural gas after meeting domestic demand following Petrobangla's first right of refusal.
"Now we are concentrating on the onshore blocks and preparing for the bidding round," the official said.
