Though the government has revised the terms and conditions for the three deep-sea blocks bidding expecting a better response from the international bidders, but so far chances seem unlikely for a wider response.
The three deep-sea blocks offered for bidding are DS-12; DS-16 and DS-21. The area of the blocks ranges from 3,190 square kilometres (sq km) to 3,516 sq kms while water depth of the blocks ranges from 200-2000 metres.
Any bidder, singly or in association with other oil or gas companies, will be eligible to bid for one or more blocks.
“So far, response is not good. We don’t know how many international oil companies are going to participate in the bidding process,” said Petrobangla chairman Dr. Hussain Monsur.
The state-owned hydrocarbon corporation, Petrobangla, set the bid submission deadline as January 12. But no new bidding document was sold ahead of the new deadline.
Petrobangla director (PSC) Imaduddin said some interested parties purchased the bid documents last year. So, there is no question of buying the documents by such aspirant bidders.
He also noted that some of the aspirant bidders contacted Petrobangla to help obtain Bangladesh visa to facilitate their visit to the country during the bid submission period. He, however, refused to give any details of the visa seekers.
Imaduddin said it will be clear only after the bid submission deadline is over as to how many companies will participate or what will be the response of the IOCs.
Replying to a query, he said no interested company has made any request yet to extend the bid submission deadline.
Many experts in the hydrocarbon industry believe that the country’s ongoing political turmoil has been a potential reason for loss of interest by the IOCs to come to Bangladesh.
Upon the request from some aspirant bidders, the government last year suspended a bidding process of the three deep sea blocks and brought six major changes to ‘Model Production Sharing Contract (PSC) 2012’, under a move to revise this key document, as per recommendation of Petrobangla to facilitate wider participation of the international oil companies (IOCs).
Among the six changes, the major one is to allow the IOC to sell its obtained gas to a third party. Earlier, no IOC had such opportunity. They were allowed to sell their gas only to state-owned Petrobangla under the existing PSC.
The other changes are raising gas price to US$ 6.5 per thousand cubic feet (MCF) from the existing US$ 5.5 per MCF; hiking the price by 2 percent every year for price adjustment; payment of corporate tax by Petrobangla instead of IOCs; raising the cost recovery portion to 70 percent from 55 percent;and exempting IOCs from paying 4 percent transportation tariff to Petrobangla for carrying gas within the country.
Besides, a new clause has been introduced in the Model PSC, making it obligatory for the IOCs to transfer technology and recruit more Bangladeshis.
While amending the PSC, the officials said these changes have been brought in line with the offers of neighbouring Myanmar and Sri Lanka, who are also inviting foreign oil companies to bid in their territories for oil and gas exploration.
Petrobangla initiated tenders in December 2011 to invite IOCs for hydrocarbon exploration in the country’s nine shallow and three deep-sea gas blocks.
But at one stage of the bidding, the foreign companies showed their reluctance about submitting bids for deep-sea blocks, terming the Model PSC conditions stiff and unsuitable.
Poor response likely in deep-sea block bid submission