Petrobangla
55 companies invited in global bid for Bangladesh offshore exploration; Energy Advisor optimistic
Prime Minister’s Energy Advisor Dr Tawfiq-e-Elahi Chowdhury has said that the international bidding for offshore oil and gas exploration will draw a huge response.
“This round, we have introduced some new aspects like linking gas price with Brent and per year cost recovery at highest 75 percent to make the bidding more attractive,” he told reporters at a press conference at Petrobangla headquarters in Dhaka on Monday.
The Energy and Mineral Resources Division organised the press conference to brief about the “Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024”, for which Petrobangla invited international oil and gas companies (IOCs).
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State Minister for Power, Energy and Mineral Resources Nasrul Hamid, Energy Secretary Md Nurul Alam and Petrobangla chairman Zanendra Nath Sarker also addressed the event.
The tender notice was published in local newspapers and websites of concerned government entities including Bangladeshi missions abroad on Sunday giving six months’ time until September 9, 2024 for submission of the bids.
As per the floated tender, a total of 24 offshore blocks — of which nine are shallow blocks — and 15 deep sea blocks are available for the bidding round.
The nine shallow sea blocks are SS-01, 02, 03, 05, 06, 07, 08, 10 and 11) and 15 deep sea blocks are DS-08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22.
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The bidder, singly or in association with other companies, can bid for one or more blocks.
Contracts will be signed with the successful bidders in line with the Bangladesh Offshore Model Production Sharing Contract 2023, said the tender.
Tawfiq Elahi Chowdhury informed that so far, the bidding invitation was sent to 55 IOCs who have contacted the government as potential bidders.
He, however, averted a question on the geopolitics that might appear to be a factor in the participation of the IOCs in the bidding round.
Nasrul Hamid said it’s an open bidding and any company eligible can bid for any block. He said a pre-bid meeting will be arranged after Ramadan for the interested bidders.
Read more: Petrobangla invites offshore bidding for oil, gas exploration
Petrobangla invites offshore bidding for oil, gas exploration
Petrobangla, the oil, gas and mineral corporation, has floated the offshore bidding, inviting international oil and gas companies to explore in the Bangladesh maritime area in the Bay of Bengal
The tender, named “Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024”, was published in local newspapers and websites of concerned government entities including Bangladeshi missions abroad on Sunday giving six months time until September 9, 2024 for submission of the bids.
As per the floated tender, a total of 24 offshore blocks — of which nine are shallow blocks — and 15 deep sea blocks are available for the bidding round.
The nine shallow sea blocks are SS-01, 02, 03, 05, 06, 07, 08, 10 and 11) and 15 deep sea blocks are DS-08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22.
The bidder, singly or in association with other companies, can bid for one or more blocks.
Contracts will be signed with the successful bidders in line with the Bangladesh Offshore Model Production Sharing Contract 2023, said the tender.
Read more Cabinet body approves draft contract to invite int’l bidding for offshore gas exploration
The features of the proposed contract include full repatriation of profit, no signature bonus or royalty, uncapped attractive gas price linked with international marker, oil price to be determined on the basis of the fair market value prevailing in South and Southeast Asia.
It entails no duty for equipment and machinery imported for petroleum operations while contractor's corporate income tax liability will be borne by Petrobangla, and bank guarantee for performance of the minimum exploration program.
There will be provision for assignment of interest and share-transfer and 100 percent cost recovery with a yearly cap of 75 percent.
The contractor must have a mandatory work program consisting of 2D seismic
survey and mandatory purchase of available
2D multi-client seismic data against bidded blocks to get relief from mandatory work obligations proportionately.
They will have minimum work obligation in each of the exploration periods while biddable work program commitment over and above the mandatory program.
There will be petroleum profit sharing on the basis of R-factor with biddable upper and lower limits and option to sell contractor's share of natural gas in the domestic market to a third party, at a negotiated price, subject to Petrobangla's right of first refusal.
Read more: New PSC: Petrobangla awaits final nods to invite int’l bidding for offshore blocks
The bidder must ensure carried stake of 10 percent for state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) for both shallow and deep sea blocks.
The bidders’ qualification criteria include — individual or in case of joint venture at least one member — offshore daily production of at least 15,000 barrel of oil or 150 mmsc of gas. Bidders must have at least one global experience (other than home country) in the oil and gas exploration and production.
The Information Package will be available at a cost of US$ 300 or equivalent Bangladeshi taka to the interested bidders/companies.
To enable companies to assess the geological prospects of the blocks on offer, Promotional and Data Packages are available on payment basis. Promotional Packages contain Bidding Document, sample seismic sections, gravity, magnetic, geological maps. Companies are required to purchase the Promotional Package in order to qualify for bidding, said the tender.
The purchase price of the Promotional Package is US$ 10,000 or equivalent Bangladeshi taka. Purchase of Data Sales Package is optional. Several Data Sales Packages are available at different prices.
Companies interested in bidding and purchase of Promotional and Data Sales Packages may contact the Director, Production Sharing Contract, Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) Petrocentre, 3 Karan Bazar, Dhaka-1215, said the bidding tender.
Read more: Action against officials of Petrobangla companies if fail to achieve target: Nasrul
Action against officials of Petrobangla companies if fail to achieve target: Nasrul
Bangladesh's State Minister for Power, Energy and Mineral Resource Nasrul Hamid has said that each of the companies of the Petrobangla will be given target to drill wells in the gas fields for hydrocarbon exploration and if they fail, the officials concerned will be removed from their posts.
“Nobody will be speared and no persuasion will be accepted against any failure”, he told a seminar titled: “Gas Demand-Supply Scenario; Scope of Seismic Survey and Enhancement of Drilling Activities to Expedite Hydrocarbon Production” organised by Petrobangla at its auditorium in the city on Thursday (February 15, 2024).
Expressing frustration over the activities of the Petrobangla, he said that there is huge deficiency in the organisation and its subordinate bodies to work as a team.
“They don’t work in a coordinated manner. As a result, sometimes gas is found in a well, but processing plant remains unprepared to supply the gas to the national grid,” he said.
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“Sometimes it takes 4 years to get gas supply from a well to the national grid,” he added.
He said Bangladesh Power Development Board (BPDB) and other entities in power sector have been successful in achieving the goal of 100 percent electricity access as they worked as a team.
The seminar, with Petrobangla chairman Zanendra Nath Sarker in the chair, was also addressed by Energy Secretary Md Nurul Alam.
Bakhrabad Gas Distribution Company’s Managing Director Anwarul Islam and Petrobangla’s general manager Meherul Hasan made presentation on the topic of the seminar.
Nasrul Hamid said the Petrobangla planned to drill 48 wells to produce 500 million cubic feet per day (mmcfd) while the country’s demand will go up by 2000 mmcfd.
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“We’re all looking at Petrobangla to see effective results of its plan…, there is huge prospects in the gas sector,” he added.
He said the country has many inefficient captive power plants which efficiency is 20 percent when some new power plants installed with 62 percent efficiency.
“If we can divert gas to those efficient new power plants, power production cost will come down by 70 percent,” he noted.
In the presentation the Petrobangla officials showed that it has planned to drill 100 wells across the country from which 1500 mmcfd gas will be produced by 2027 when gas demand will go up to 6000 mmcfd.
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Cabinet body approves draft contract to invite int’l bidding for offshore gas exploration
The Cabinet Committee on Economic Affairs (CCEA) in a meeting today (July 26, 2023) approved the draft ‘Bangladesh Offshore Model Production Sharing Contract (PSC) 2023’ in order to invite international bidding for hydrocarbon exploration in offshore areas of the country.
Finance Minister AHM Mustafa Kamal presided over the meeting.
However, Additional Secretary of the Cabinet Division, Sayed Mahbub Khan, who briefed about the outcomes, did not give further details of the Model PSC.
"This is the final approval to the draft Model PSC 2023,” he said.
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According to official sources, the new Model PSC was prepared as part of the plan to invite international bidding within the current year for offshore deep and shallow water gas blocks by making Bangladesh more attractive to international oil companies and draw investment in hydrocarbon exploration in the Bay of Bengal.
Under the initiative, the gas price was tagged with the price of Brent Crude in the international market so that the gas price will be flexible.
“Under the plan, we’re going to offer the price of gas at 10 percent of Brent Crude,” a top official of Petrobangla, the state-owned national gas company, told UNB.
The official, preferring anonymity, said if Brent oil is traded at $75 per barrel, the gas price would be $7.5 per thousand cubic feet (MCF). The gas price will always remain linked with the international oil price, he said, referring to the new provision of the 'Model PSC 2023'.
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But there will be no difference between the price of gas in shallow and deep water blocks, he said, describing other characteristics of the 'Model PSC 2023'.
“If the oil price goes down or up, the gas price will follow it rationally and Bangladesh will purchase the explored gas from the international oil companies at this rate,” said the official.
Under a Model PSC, normally, if any international oil company (IOC) discovers gas, it gets a 40 percent stake while the government obtains the remaining 60 percent.
The government also buys the IOC's gas at a certain price. So if the gas price is raised, IOCs feel encouraged to invest in exploration work.
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Official sources said the country has a total of 48 blocks, of which 26 are located offshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water while 15 are located in deep sea (DS) water areas.
Of these, 24 offshore gas blocks remain open for IOCs while two blocks—SS-04 and SS-09–are under contract with a joint venture of ONGC Videsh Ltd and Oil India Ltd where drilling works have recently started.
Bangladesh's offshore area remains unexplored despite the settlement of its dispute with neighbouring Myanmar and India over maritime boundary almost nine years ago.
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Currently, about 2300 mmcfd gas is being produced from 22 gas fields in the country, while about 700 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1000 mmcfd.
The government had last amended the Model PSC in mid-2019, whereby the price of gas for any participating IOC, that is, the price at which they would sell the gas to the government, was raised to $5.5 per MCF for shallow water blocks, and $7.25 per MCF for gas extracted from its deep sea blocks.
The source also informed that the new proposal has been prepared as per the recommendations of a Scottish consultancy firm, Wood Mackenzie, which was appointed last year to work out the new plan for Petrobangla to attract international bidding from IOCs.
Talking to reporters, Petrobangla Chairman Zanendra Nath Sarker recently said the organisation has forwarded its proposal along with the Scottish consultancy firm’s recommendation to the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources, seeking its approval for the plan.
Another senior official of Petrobangla also said that as soon as the Cabinet body approves the proposal, the organisation will invite international bidding within two months. “In this case, we hope we can go for bidding within this year,” he told UNB preferring anonymity.
He said previously many IOCs were reluctant to participate in bidding for exploration due to the price offered by Bangladesh.
Govt planning to invite int’l bidding for offshore blocks with more attractive PSC
“Now we hope it will be a lucrative offer for the IOCs to invest in the offshore areas of Bangladesh for gas exploration,” he added.
Official sources said the recent excessive hike in fuel prices, especially that of liquefied natural gas (LNG), has prompted the government to go for further amending the existing PSC so that the IOCs get interested to invest here.
There was a target to invite international bidding in March 2020 for exploration in offshore areas, but that got postponed due to the coronavirus pandemic that emerged at exactly the same time.
"The recent upward trend in oil and gas prices has pushed the policymakers to further raise the gas price by introducing much more flexibility and incentives including keeping the export option open in the PSC," said another Petrobangla official.
He mentioned that the government had to import LNG at $36 per MMBtu while it was just below $10 early last year.
The Russian invasion of Ukraine has further deepened the global market volatility pushing up petroleum price over $100 per barrel, the highest in the last 7 years.
Now, again oil and gas prices are on a downward trend and Brent crude oil is traded at $75 per barrel while LNG price is at below $14 per MMBtu.
New PSC: Petrobangla awaits final nods to invite int’l bidding for offshore blocks
New PSC: Petrobangla awaits final nods to invite int’l bidding for offshore blocks
State hydrocarbons agency Petrobangla’s is close to receiving the nod from the very top, to invite a round of international bidding for Bangladesh's offshore gas blocks based on its new model production sharing contract (Model PSC) within the current year.
A proposal in this regard was recently sent to the Prime Minister’s Office (PMO) for its approval to proceed, UNB understands from its sources.
“We’ve received initial approval from the Energy and Mineral Resources Division and then, as the next step, it was forwarded to the PMO as Prime Minister is the in-charge of the ministry,” said a top official of Petrobangla, preferring not to be named in discussing the sensitive issue.
He said after the PM's approval, it would be placed in the Cabinet Committee on Economic Affairs (CCEA) for the very final approval, as it acts as the highest policymaking body. Since the PM heads the CCEA, that should be a formality once it passes her desk.
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Then Petrobangla will be free to move towards inviting the international bidding round, he noted.
Earlier, Petrobangla updated its Model PSC, to make it more attractive for international oil companies (IOCs) to explore for oil and gas in the country’s maritime areas in the Bay of Bengal.
In the new Model PSC, the gas price will be offered at 10 percent of Brent Crude, the most traded of all the oil and gas benchmarks. It means if Brent is being traded at $75 per barrel, the price at which the government would buy any gas the company is able to produce at $7.5 per thousand cubic feet (MCF).
“The gas price will always remain linked with the international oil price,” said the official, referring to the new provision in the 'Model PSC 2023'.
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There will also be no difference between the price of gas in shallow or deep water blocks, he said. This is another change from the previous PSC.
“If the oil price goes down or up, the gas price will follow it rationally and Bangladesh will purchase the gas from the IOCs at this rate,” said the official.
Under a Model PSC, normally, if any IOC discovers gas, it gets a 40 percent stake while the government obtains the remaining 60 percent.
The government also buys the IOC's gas at a certain price. So if the gas price is raised, IOCs feel encouraged to invest in exploration works.
Read: Petrobangla initiates move to end foreign company’s monopoly in pre-paid gas metering system
The government had last amended the Model PSC in mid-2019, whereby the price of gas for any participating IOC, that is, the price at which they would sell the gas to the government, was set at $5.5 per MCF for shallow water blocks, and $7.25 per MCF for gas extracted from deep sea blocks.
Scottish consultancy firm Wood Mackenzie was appointed last year to update the Model PSC - specifically, to make it more attractive to IOCs.
Petrobangla chairman Zanendra Nath Sarker recently said the organisation forwarded its proposal to the Energy and Mineral Resources Division for approval with a plan to go for international bidding by July or August this year.
Officials said previously many IOCs were reluctant to participate in the bidding of the exploration due to the low price offered by Bangladesh.
Read More: Petrobangla initiates move to end foreign company’s monopoly in pre-paid gas metering system
Official sources said the recent excessive hikes in petroleum fuel price, especially that of liquefied natural gas (LNG), prompted the government to go for further amending the existing PSC so that the IOCs get interested to invest here.
The country has a total of 48 blocks of which 26 are located offshore and 22 onshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water while 15 are located in deep sea (DS) water areas.
Of these, 24 offshore gas blocks remain open for IOCs while two blocks -SS-04 and SS-09-are under contract with a joint venture of ONGC Videsh Ltd and Oil India Ltd where drilling works have recently started.
Bangladesh's offshore area remains largely unexplored, especially its deep sea (DS) blocks, despite the settlement of its dispute with neighbouring Myanmar and India over the maritime boundary almost nine years ago.
Read more: Govt planning to invite int’l bidding for offshore blocks with more attractive PSC
Currently, about 2300 mmcfd gas is being produced from 22 gas fields in Bangladesh, while about 700 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1000 mmcfd daily.
Petrobangla initiates move to end foreign company’s monopoly in pre-paid gas metering system
Petrobangla has initiated a move to bring an end to the existing monopoly of a particular foreign company in its pre-paid gas metering system.
“We’ve already received the government’s policy approval to allow battery-run pre-paid gas meter,” Petrobangla Chairman Zanendra Nath Sarker told UNB recently.
According to official sources, a Japanese company has been providing all the pre-paid gas meters which are synchronized with Titas and other distribution companies’ data accumulation system while others’ systems are not synchronised due to a monopoly in the system.
They said the government took a decision more than three years ago to allow consumers to install pre-paid gas meters besides the ongoing process of installing meters by the gas distribution companies.
Also read: Business disputes stall govt move to open pre-paid gas meters market to consumers
Under the decision, any vendor can sell pre-paid gas meters, like pre-paid electricity meters, in the open market and any consumer can buy it to install at his/her own cost.
Such a decision was taken in order to expedite the process of installing pre-paid meters for consumers’ benefit. Because, if a gas meter is installed, it will check misuse of gas as well as cut the overall cost of consumers.
In the existing system, a pre-paid gas consumer pays almost one-third of the bill normally paid by a non-metered consumer.
But so far, no public or private company has shown any interest in getting involved in the pre-paid meter business because of the monopoly of a certain company in the data acquisition system of Titas Gas and other distribution companies.
Read More: Govt planning to invite int’l bidding for offshore blocks with more attractive PSC
Some industry insiders alleged that the data accumulation system of Titas Gas remained monopolised by a particular meter-manufacturing company where meters from other companies are not synchronized.
This has jeopardised implementation of the government’s plan to introduce pre-paid gas meters for all, industry insiders observed.
Petrobangla chairman said that they are contacting multilateral agencies like ADB, World Bank and JBIC to get funds to install more pre-paid gas meters across the country.
Petrobangla Director (Operation and Mines) Md. Kamruzzaman Khan said that a technical committee has been formed. “Now it has been working to eliminate the monopoly by introducing a unique language in the system so that any company complying with certain standards can have access to the data accumulation system of the distribution entities,” he said.
Read More: Petrobangla wants to set up 3 more LNG terminals to meet growing gas demand
“We hope 10-12 companies will make a demonstration on the issue in the current month,” he added.
According to a study conducted by Bangladesh Institute of Development Studies (BIDS), there are about 4.15 million consumers in the domestic category in the country. The number break-up: Titas Gas has 2.78 million consumers, Bakhrabad Gas 0.491 million, Jalalabad Gas 0.417 million, Poschimanchol Gas 0.128 million, Karnaphuli Gas 0.65 million, and Sundarban Gas has 0.0035 million consumers.
The latest figure released by Titas Gas, however, shows it has more than 2.8 million household consumers.
The latest study by Bangladesh Energy Regulatory Commission (BERC) shows that a pre-paid metered consumer uses 40-50 cubic meter of gas and pays around Tk 500-630 a month while a non-metered consumer for a single burner has to pay almost double, at Tk 990, for the same quantity of consumption.
Read More: Risky way of supplying gas in cylinders: Petrobangla body for strong safety rules
So far only 400,000 pre-paid gas meters have been installed in different areas in Dhaka city including Dhanmondi, Mohammadpur, Gulshan, Banani, Baridhara, Uttara, Mohammadpur, Badda, Tejgaon, Cantonment, Kafrul, Khilkhet, and Mirpur under a JICA-funded project.
Another 120,000 metres are now being installed in different areas in central Dhaka, including Paltan, Ramna, New Market, Khilgaon and Segunbagicha under Dhaka South City Corporation (DSCC). Most consumers of Titas Gas and other distribution companies remain unmetered.
Govt planning to invite int’l bidding for offshore blocks with more attractive PSC
The government of Bangladesh is preparing to invite international bidding for the country's offshore gas blocks by making the model production sharing contract (Model PSC) more attractive for international oil companies (IOCs) to invest in hydrocarbon exploration in the Bay.
“We’re going to offer the price of gas at 10 percent of Brent Crude,” a top official of Petrobangla, the state hydrocarbons agency, told UNB, referring to the most traded of all of the oil benchmarks.
The official, preferring anonymity to discuss the sensitive issue, said if Brent oil is traded at $75 per barrel, the gas price would be $7.5 per thousand cubic feet (MCF). The gas price will always remain linked with the international oil price, he said, referring to the new provision of the 'Model PSC 2023'.
Also read: Petrobangla to amend Model PSC further to attract IOCs in offshore gas exploration
But there will be no difference between the price of gas in shallow and deep water blocks, he said.
“If the oil price goes down or up, the gas price will follow it rationally and Bangladesh will purchase the explored gas from the IOCs at this rate,” said the official.
Under a Model PSC, normally, if any IOC discovers gas, it gets a 40 percent stake while the government obtains the remaining 60 percent.
The government also buys the IOC's gas at a certain price. So if the gas price is raised, IOCs feel encouraged to invest in exploration works.
Read More: Govt expedites gas exploration activities to increase primary fuel supply: Nasrul Hamid
The government had last amended the Model PSC in mid-2019, whereby the price of gas for any participating IOC, that is, the price at which they would sell the gas to the government, was raised to $5.5 per MCF for shallow water blocks, and $7.25 per MCF for gas extracted from its deep sea blocks.
The source also informed that the new proposal has been prepared as per the recommendations of a Scottish consultancy firm, Wood Mackenzie, which was appointed last year to work out the new plan for Petrobangla to attract the international bidding for IOCs.
Talking to reporters, Petrobangla chairman Zanendra Nath Sarker recently said the organisation has recently forwarded its proposal with the Scottish consultancy firm Wood Mackenzie’s recommendation to the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources seeking its approval for the plan.
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The ministry will now seek the approval of the Prime Minister’ Office for Petrobangla's plan.
“Once we receive the nod of the PMO and the ministry, we would place a proposal to the Cabinet Economic Affairs Committee for the final approval,” he added.
Another senior official of Petrobangla also said that as soon as the Cabinet body approves the proposal, the organisation will invite international bidding within two months. “In this case, we hope we can go for bidding within July or August next,” he told UNB preferring anonymity.
He said previously many IOCs were reluctant to participate in the bidding of the exploration due to the price offered by Bangladesh.
Read More: Accelerate gas exploration to overcome energy crisis: ICCB
“Now we hope it will be a lucrative offer for the IOCs to invest in the offshore areas of Bangladesh for gas exploration,” he added.
Petrobangla appointed Wood Mackenzie last year to help amend the Model PSC 2019, to attract international oil companies amid the volatile international fuel market.
Official sources said the recent excessive hike in petroleum fuel price, especially that of liquefied natural gas (LNG), has prompted the government to go for further amending the existing PSC so that the IOCs get interested to invest here.
The country has a total of 48 blocks of which 26 are located offshore and 22 onshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water while 15 are located in deep sea (DS) water areas.
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Of these, 24 offshore gas blocks remain open for IOCs while two blocks -SS-04 and SS-09-are under contract with a joint venture of ONGC Videsh Ltd and Oil India Ltd where drilling works have recently started.
There was a target to invite international bidding in March 2020 for exploration in offshore areas, but that got postponed due to the Coronavirus pandemic that emerged at exactly the same time.
"The recent upward trend in oil and gas price has pushed the policymakers to further raise the gas price by introducing much more flexibility and incentives including keeping the export option open in the PSC," said another Petrobangla official.
He mentioned that the government had to import LNG at $36 per MMBtu while it was just below $10 early last year.
Read More: Gas Fields in Bangladesh: Exploration of 2 more wells expected to begin this year
The latest Russian invasion of Ukraine has further deepened the global market volatility pushing up the petroleum fuel price over $100 per barrel, the highest in the last 7 years.
Now again the oil and gas prices are on a downward trend and Brent crude oil is traded at $75 per barrel while LNG price is at below $14 per MMBtu.
Bangladesh's offshore area remains unexplored despite the settlement of its dispute with neighbouring Myanmar and India over the maritime boundary almost nine years ago.
Currently, about 2300 mmcfd gas is being produced from 22 gas fields in the country, while about 700 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1000 mmcfd.
Read More: US companies encouraged for oil, gas exploration in Bangladesh's offshore
Petrobangla wants to set up 3 more LNG terminals to meet growing gas demand
State-owned Petrobangla has moved to set up three more liquefied natural gas (LNG) terminals in addition to the existing two currently being operated to regasify imported gas.
The proposed three new LNG terminals will be set up in Payra, Moheshkhali and Matarbari whose total regasification capacity would be 2000-3000 MMcf/d, said Petrobangla Chairman Zanendra Nath Sarker.
Sarker informed that of the three LNG terminals to be set up, two will be floating – known as floating storage and regasification unit (FSRU), while one will be land-based terminal.
Read More: Govt resumes importing LNG from int'l spot market
According to official sources, all three LNG terminals will be set up on the basis of unsolicited offers received from local and foreign companies.
Two floating storage and regasification units have been in operation since 2018, of which one was set up by Excelerate Energy of USA at Moheshkhali of Cox’s Bazar with 500 million cubic feet per day while another with the same capacity was set up by the Summit Group in the same area.
Of the three terminals to be set up, Excelerate Energy has made an offer for the Payra site while Summit Group made an offer for Moheshkhali. Petrobangla has shortlisted 12 firms for the Matarbari site.
Read More: Risky way of supplying gas in cylinders: Petrobangla body for strong safety rules
Each of the FSRUs in Payra and Moheshkhali will have the capacity to regasify 500-1000 MMcf/d gas.
“Negotiations are progressing fast… We have prepared the term sheet agreement for Payra and Moheshkhali terminals and sent those to the concerned ministry for approval,” the Petrobangla chairman said recently.
For the Matarbarti land-based terminal, Petrobangla is waiting to receive a no-objection certificate from Bangladesh Power Development Board (BPDB) which is the original owner of the land.
Read More: No additional LNG supply from Qatar before 2025: Petrobangla
“Once we receive the NOC, our team and consultant are ready to select the firm for the Matarbari terminal,” Sarker said, adding that there will be options to increase the capacity of Matarbari land-based terminal from its initial capacity.
He, however, said that if the government gives approval for setting up the terminals now, it will take 3-5 years to get them installed and ready for operation.
He also justified Petrobangla’s move to setting up the new LNG terminals, saying that the country’s demand for gas supply is growing rapidly and it will reach 6500 MMcf/d by 2030 from the current demand of 4,000 MMcf/d against a supply of 3,000 MMcf/d.
Read More: Petrobangla starts drilling in Shahbazpur Gas Field
If the moves are not undertaken, the country will experience more deficit in gas supply, the Petrobangla chairman said.
Govt resumes importing LNG from int'l spot market
The government has resumed importing LNG (liquefied natural gas) from the international spot market.
According to official sources, the Cabinet Committee on Government Purchase (CCGP) approved a proposal of the state-owned Petrobangla to import one cargo of LNG.
Agriculture Minister Abdur Razzaque presided over the meeting held virtually on Wednesday.
The government had earlier suspended the import of LNG from the international spot market in July last year (2022) following the excessive hike in prices of the gas against the backdrop of the Russia-Ukraine war.
Before the war, Bangladesh was purchasing LNG from the spot market between $6-10 per MMBtu. After the start of the war in February this year, the price crossed $37 per MMBtu.
Official sources said the Energy and Mineral Resources Division placed the proposal on behalf of its subordinate body Petrobangla to import the LNG.
"The price of LNG was quoted at $19.78 per MMBTu (Million British Thermal unit) and the cost of the total consignment was set at Tk 850 crore", said a source at the Energy and Mineral Resources Division.
He noted that the government has planned to import a total of 12 LNG cargos in 2023 to meet the growing demand for natural gas.
Read moroe: Bangladesh expects 1-1.5mn MT LNG annually from Brunei starting early 2023
As part of the austerity measures, the government last year suspended power generation from diesel-fired power plants and also import of the LNG as the prices of the products went too high.
As a result, the government was incurring a huge financial loss in importing LNG at higher prices and selling it to the local market at lower prices.
But recently, the government raised the gas prices at retail level for power plants, industries, and commercial users to reduce subsidies in the sector as per advice of the International Monetary Fund (IMF) to get a loan from the multilateral lending agency.
As per the recent announcement, the retail price of gas was raised by 14.5 percent to 178.9 percent for industries, power plants and commercial establishments, who together account for 78 percent of gas use in Bangladesh while price of gas for captive power plants and industries, gas was raised to Tk 30 per cubic metre.
This would be a 150 percent hike for large industries, 154.7 percent for medium industries and 178.3 percent for small and cottage industries. For captive power plants, it would be an increase of 87.5 percent.
Commercial establishments like hotels and restaurants will have to pay Tk 30.50 per unit, up 14.5 percent from the existing rate.
Read more: Despite suspension of LNG import, govt decides to increase listed suppliers’ numbers
The tariff for households, fertiliser production, CNG-run vehicles and tea gardens will remain unchanged.
The country produces about 2,300 million cubic feet per day (MMCFD) gas from local gas fields to meet a demand of over 2,800 MMCFD leaving a gap of 500 MMCFD.
To meet this gas the government has to import a huge LNG from abroad of which it meets 350 MMCFD gas through importing it from Qatar and Oman under long-term agreements while remaining 150 MMCFD is being imported from the international spot market.
Risky way of supplying gas in cylinders: Petrobangla body for strong safety rules
A technical committee of Petrobangla recommended formulating separate safety and security guidelines to allow any private company to supply gas from Bhola to local industries as CNG (compressed natural gas).
“We’ve submitted our report to the top management of Petrobangla recently”, a member of the committee, preferring anonymity, told UNB.
He said the committee also recommended involvement of the Department of Explosive in ensuring compliance of certain security protocols. The committee also wants strong monitoring by the RPGCL to ensure specific procedures in gas transportation for motor vehicles.
The state-owned Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla, formed the committee last month after three local CNG refuelling companies expressed their interest to carry natural gas in CNG form from Bhola to Dhaka in trucks and covered vans.
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Each truck or covered van will have a good number of gas cylinders, each having 90-kg gas containing capacity.
These companies—Intraco CNG, Super CNG and Oblivious—submitted separate proposals to the Sundarban Gas Company Limited (SGCL), a Petrobangla subsidiary responsible for distribution of natural gas from Bhola field to the southern and eastern parts of the country.
The SGCL forwarded the proposals to Petrobangla for the decision.
Receiving the proposals, the Petrobangla formed a 4-member technical committee, headed by director (planning) to examine the proposal and recommend follow-up actions.
Read: Low pressure problem in gas supply to industries to be resolved: Nasrul
A senior official from Rupantarita Prakritik Gas Company Limited (RPGCL) was also kept in the committee as currently this company is responsible for import of gas through liquefied natural gas (LNG) and also for issuing permission for setting up CNG stations.
Another member of the committee said that ensuring safety is a must. Otherwise, it will be impossible to check anarchy and risk in this business as the gas will be carried through highways.
The issue of the supply of gas from Bhola came to the focus following the Prime Minister’s Energy Advisor Dr Tawfiq-e-Elahi Chowdhury’s recent assurance to a gathering of top business leaders to supply such gas within 2-3 months.
Petrobangla officials said that when the country has been experiencing a nagging gas crisis, the Bhola gas field has surplus production capacity which remains unutilised due to supply mechanisms.
Read: Can’t import 400 MMCFD gas as per businessmen’s demand: Energy Advisor
The gas field’s production capacity is 170 million cubic feet per day (MMCFD) while it produces 90 MMCFD. So easily, 80 MMCFD gas could be supplied to the national network if safe transportation is ensured, Petrobangla chairman Nazmul Ahsan recently told reporters.
At present, the country produces 2,700 MMCFD gas against a demand of 3,500 MMCFD and the deficit is about 800 MMCFD.
Currently, transportation of natural gas in CNG form by-road is prohibited considering its risk for major explosion as CNG is a form of gas processed by compressing the natural gas at 3000 PSI (pounds per square inch).
Energy experts said transportation of natural gas in CNG cylinders is not allowed in normal trucks because of its high-pressure characteristics.
Read More: Petrobangla to get Tk 2000 crore from GDF to import LNG
About the option of bringing gas from Bhola through CNG form, eminent energy expert Dr M Tamim said it will be too dangerous to carry CNG through normal trucks having cylinders, which is currently being practised by different garment and textile factories.
There are some specialised barge-mounted CNG carriers which could be allowed under certain rules and regulations.
“This kind of business needs some specific technical and technological process to be set up to ensure its safety as the CNG is of highly compressed gas of 3000 psi”, he told UNB.
Installation of such a process might not be possible within a short period of 3 or 4 months, he added.
Read More: Petrobangla starts drilling in Shahbazpur Gas Field
Despite prohibition, some textile and garment factories collect natural gas from refuelling stations through small containers, mounted on trucks, to meet their industrial needs against the backdrop of the gas crisis.
In this case, a truck carries 30-50 CNG cylinders and each cylinder has 90 kg of compressed gas bottling capacity.
This kind of CNG transportation is highly risky. An incident of explosion happened at a CNG re-fuelling stations in Gazipur in which for people were killed on October 13. Explosion occurred when a garment factory was injecting gas into cylinders in illegal from the gas station.
Despite this incident, recently, three export-oriented business bodies—Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) — requested the Bangladesh CNG Filling Station & Conversion Workshop Owners Association to supply natural gas to their member industries through cylinders.
Read More: No additional LNG supply from Qatar before 2025: Petrobangla
But CNG filling station owners rejected the request, saying that entertaining such requests is not possible as the existing law in Bangladesh does not permit them to supply CNG through cylinders.