A lukewarm response to Bangladesh’s December 2012 bidding round has prompted the country to start preparing to offer deepwater oil and gas blocks with more attractive Production Sharing Contract (PSC) terms.
“Petrobangla (Bangladesh Oil, Gas and Mineral Corp.) will offer the deepwater blocks before the end of this month with revised PSC guidelines,” said Petrobangla director, Muhammad Imaduddin. The state-run upstream company will re-seek bids for three deepwater blocks it offered in the December round.
The blocks, located in the Bay of Bengal, are: DS-12 (3,516 sq km), DS-16 (3,335 sq km), and DS-21 (3,190 sq km).
“We want to ensure that the terms and conditions of the PSC for our deepwater blocks are competitive with those of neighbouring countries like Myanmar and India,” Imaduddin said.
The proposed changes include:
- Contractors will be allowed to sell half of their explored and extracted volume of oil or gas to third parties without Petrobangla’s right of first refusal;
- The cost recovery limit will increase to a maximum of 70% per calendar year, instead of 55%, of all available oil, gas, or condensate from the contract area;
- The wellhead gas price will be pegged to high sulphur fuel prices.
- Contractors will enjoy a tax holiday during the entire exploration, development, and production phases.
These changes will be included in the revised model PSC along with other features such as zero import duty for equipment and machinery imported for petroleum operations during, exploration, development and production phases; no signature bonus or royalty; full repatriation of profit; provision for assignment of interest and share transfer; prohibition on export of gas; and 100% cost recovery.
Of the 12 blocks originally offered, it received bids from only two companies for just three blocks. India’s ONGC Videsh Ltd. placed bids for two blocks (SS-07 and SS-09), while ConocoPhillips went for just one (SS-04).
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