Bangladesh plans a 7.5-per cent hike in gas price for international oil companies to lure global players into hydrocarbon exploration in its untapped offshore blocks in the upcoming bidding.
The selected bidders would also be able to export gas in any form-piped or liquefied-after having 'right of first refusal' from state-run Petrobangla.
"We've finalised a model production-sharing contract (PSC) to award offshore blocks to international oil companies (IOCs) following a competitive bidding soon," Petrobangla chairman Md Ruhul Amin said on Thursday.
Some 22 offshore blocks-eight in shallow water and 14 in deep water-in the forthcoming bidding round.
The bidding will be launched after getting the go-ahead from energy and mineral resources division under power, energy and mineral resources ministry, he told the FE.
In the model PSC, gas price has been pegged to high sulfur fuel oil prices, or HSFO.
The floor price for HSFO has been fixed at $100 per tonne and the ceiling price at $215 per tonne.
It works out the price at around $7.25 per Mcf (1,000 cubic feet), said a senior Petrobangla official.
The gas price was fixed at $100 per tonne at floor level and $200 per tonne at ceiling level during the 2012 offshore bidding, he added.
The PSC formula in 2012 worked out the price at around $6.50 per Mcf.
Besides, a selected bidder would have a price escalation on produced hydrocarbon at 1.5 per cent per annum after initiating production from its respective offshore block.
In the 2012 bidding round, there was a price escalation provision by 2.0 per cent per annum after initiation of production from a block, said the official.
The export of any form of gas was prohibited in the 2012 bidding round.
"The upcoming bidding round is very important for us to ensure the country's future energy security," the Petrobangla chief said.
"If any natural gas reserve is discovered," he said, "we'll go for prompt production to ease the growing dependence on imported LNG to meet domestic demand."
Currently, Bangladesh is importing lean LNG (liquefied natural gas) from Qatar and Oman.
Its maiden operational 3.75-Mtpa (million tonnes per annum) FSRU is currently regasifying around 534 million cubic feet per day (mmcfd) of LNG.
Overall LNG import would rise significantly with the commissioning of the country's second FSRU (floating, storage, regasification unit) slated for April 20.
The local Summit Group owns the second FSRU having the similar capacity of the first one by the US-based Excelerate Energy's Excellence.
Natural gas production from local fields is hovering around 2,700 mmcfd against the overall demand for around 4,000 mmcfd currently, according to Petrobangla.
Petrobangla has accommodated recommendations from a New Zealand-based international consultant while finalising the model PSC as several past bidding rounds saw lukewarm response from the IOCs.
According to experts, many IOCs did not take part in the offshore bidding rounds in 2008, 2012 and 2016 only due to 'inadequate' fiscal terms.
Bangladesh currently has a total of 26 offshore blocks.
Five IOCs have active PSCs either individually or under joint venture to explore three shallow-water blocks and one deep-water block.
ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly exploring shallow-water blocks SS-04 and SS-09.
The joint venture of Australian Santos and Kris Energy is exploring shallow-water block SS-11.
POSCO Daewoo Corporation has a contract to discover hydrocarbon in deep-water block DS-12.
The country has not offered any onshore oil and gas blocks since 1997.
