Photo: Collected
Petrobangla, the state-owned oil, gas, and mineral corporation, has taken steps to amend the Production Sharing Contract (PSC) for onshore bidding by increasing the price of gas, a move that officials believe could make the PSC more lucrative to foreign giants.
Due to the gas crisis in the country, the Power Development Board cannot utilize about 15,000MW of electricity capacity. Moreover, the government has to import pricey LNG from abroad. Consequently, Petrobangla has initiated efforts to explore domestic resources.
According to the plan, Petrobangla will explore 69 gas wells and develop 31 existing gas wells. To drive these extensive activities to extract gas, the corporation will invite bids from international energy giants.
However, to make the PSC lucrative to international companies, Petrobangla is amending it by hiking the gas price. Officials believe that if they float the bid with the earlier price, global giants will not be interested in working in Bangladesh. Therefore, hiking the gas price is necessary.
Chairman of Petrobangla, Zanendra Nath Sarker, told the Daily Messenger, “Energy is the core element for the power sector and industrialization. Due to the gas crisis, we cannot utilize the huge power generation potential, so we are driving efforts to explore gas.”
He also said, “After taking the chair of Petrobangla, I have planned to increase the supply of gas to the national grid. I have formulated this plan over two years. The PSC has already been amended and is now awaiting approval from the Prime Minister.”
“To attract global energy giants, we have to review the gas price. Besides, we have plans to strengthen local companies including BAPEX,” he added.
Professor Izaz Hossain, a prominent energy expert, told the Daily Messenger, “To make jobs lucrative in Bangladesh, the price of gas should be hiked, but it should be up to 50 percent, not doubled. Currently, the government is buying gas from IOCs at $3 per cubic feet, which should be $4.5.”
He said that the situation in the world has changed drastically since 2020.
Additionally, the state-owned gas and oil exploration company BAPEX could not drill as per expectations during the past 20 years. So, it is a timely decision to invite global giants.
Engineer Md Rafiqul Islam, Director (Production Sharing Contract) (Additional Charge), said, “We are facing a big problem regarding the price of gas in the exploration phase. The IOCs seek to hike the price of gas, but under the Model PSC-2012, it is not possible to meet IOCs' demands. Therefore, we have applied to the government to amend the PSC.”
The IOCs had some objections about the present PSC in terms of key points such as "product price" and "share ratio of production." In this regard, the Energy Division has decided to amend the PSC to attract the IOCs.
An Energy Division official said, “We are going to appoint a consultant to identify the difficulties in the PSC so that we can update it, which will be able to draw the attention of international companies.”
US energy giant ConocoPhillips and Statoil, a joint venture company, had left the contracts for blocks 12, 16, and 21 due to low gas prices.
A Petrobangla official said, “To accelerate the exploration activities, PSC amendment is now a pressing need.”
He also said that the price will be linked to the international market to address the crisis in gas price fixing. Already, the IOCs companies have left projects due to this issue.
In response to a question, he said, “PSC amendment is not only to hike gas price; it will simply remove the crisis of price fixing.”
Moreover, there are also some technical problems in the PSC that should be addressed to maintain international standards in exploration activities.
Messenger/Disha
