The federal government of Bangladesh has approved a model production sharing contract (PSC) for raising the price of natural gas in a bid to entice exploration companies.
The PSC was authorised by the Cabinet Committee on Economic Affairs, which will benefit the international oil and gas companies.
In all 12 offshore blocks in the Bay of Bengal will be offered up for bidding this year, of which nine are in shallow water and three in deep water.
The new PSC will raise gas prices which are pegged to high sulfur fuel oil (HSFO).
Bangladesh Energy Secretary Mohammad Mesbahuddin said the HSFO floor price has been raised to $100 per ton and the ceiling to $200 per ton, and gas would be around $5.00/Mcf, based on the proposed pricing formula.
"We have planned to invite bids in the first week of next month (October)," Mesbahuddin said.
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"We have increased the tariff rate to woo a good number of international oil companies to take part in bidding and explore the country’s untapped hydrocarbon potential in the Bay of Bengal."
No block has been specified or created for the bidding yet. Petrobangla director for PSC Muhammad Imaduddin said if gas is produced from these fields, the contractors will provide a five percent profit of gas to the company.
"A map of the bidding area will be placed for the Cabinet approval before the bid invitation," said Imaduddin.
Petrobangla may create blocks and demarcate them in line with the International Tribunal for the Law of the Seas verdict.
"We hope, we could be able to complete the necessary preparations within this month and then go for the bidding early next month," added Mesbahuddin, reported by thefinancialexpress-bd.com.
Image: Offshore blocks in the Bay of Bengal will be offered up for bidding this year. Photo courtesy of: Jagadhatri.