Bangladesh Offshore Bidding 2024 Announced

Bangladesh has unveiled its Offshore Bidding 2024 initiative aimed at accelerating oil and gas exploration activities. A press conference was held at the PetroBangla Auditorium to mark the launch of the Bangladesh Offshore Bidding Round-2024.

Honorable Advisor to the Prime Minister of Bangladesh on Energy, Power and Mineral Resources, Tawfiq-e-Elahi Chowdhury, Bir Bikram, was present as the chief guest at the press conference, also attended by State Minister for Power, Energy and Mineral Resources Nasrul Hamid as a special guest.

Model PSC 2023 at a Glance:

Although the Petroleum Sharing Contract (PSC) was updated separately for offshore and onshore operations in 2019, the outbreak of the coronavirus pandemic prevented the initiation of a Biding Round. The global economy and the oil market experienced significant instability due to the pandemic, resulting in a decrease in exploration activities. In response to this challenging environment, international consultants were engaged to enhance the competitiveness and relevance of the Offshore Model PSC 2019 on a global scale. Consequently, the Bangladesh Offshore Model PSC 2023 was developed, incorporating insights from the consultants and PetroBangla's internal assessment. This revised framework was subsequently endorsed by the Cabinet Committee on Economic Affairs on 26 July 2023.

Some important features of this year's PSC are:

• The updated PSC introduces several noteworthy provisions designed to foster exploration ventures for international oil companies in Bangladesh's offshore regions. Notably, the annual cost recovery ceiling has been set at a maximum of 75% for both deep and shallow sea areas. This adjustment incentivizes contractors to recoup their investments swiftly. Moreover, expedited cost recovery translates to higher dividends for PetroBangla and the government, offering mutual benefits for all stakeholders involved.

• Significant improvements have been made in the Profit Sharing aspect of the PSC. Previously, Profit Sharing was tied to production levels, but the current PSC adopts a Profitability-Based approach, specifically using the R-Factor. Under this method, the contractor's investment is assured to be recouped within a reasonable timeframe, while the government stands to gain higher dividends through the upper and lower limits set for bidable dividend shares.

• The pricing of shallow and deep sea gas has shifted from using HSFO as a marker to Brent crude oil. This new system links gas prices directly to the international market by setting them at a fixed 10% of the Brent price. Unlike the previous system, there are no longer any price floors or ceilings, allowing for greater fluctuation based on global trends.

Chairman of PetroBangla, Zanendra Nath Sarker moderated the press conference, chaired by Secretary to Energy and Mineral Resources Division, Md Nurul Alam.