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. Read: Dhaka’s air quality still 'unhealthy', 2nd most polluted in the world this morning  “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. Read: New executive committee of BSFA pays homage to Bangabandhu  “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. Read more: Nasrul Hamid seeks ADB's help to create regional power market

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. Cabinet purchase body approves import of LNG, rice bran oil and fertiliser 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'. Govt expedites gas exploration activities to increase primary fuel supply: Nasrul Hamid 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. Keeping retail gas tariff unchanged govt resets margins of upstream, downstream companies 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. Titas Gas faces assaults from local lawmakers' supporters when removing illegal gas connections: Titas MD 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

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. Read More: Amid nationwide gas shortages, new exploration work continues in Sylhet 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. Read More: Russian Embassy refutes TIB statement on Dhaka-Moscow grain deals, gas exploration 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

A formula-based pricing policy needs to be put in place to attract international oil companies (IOCs) to explore hydrocarbon in Bangladesh, energy experts said on Saturday. "Unless there is a formula to fix energy prices, the IOCs will not be interested to come here," said Khondokar Abdus Saleque, a former senior official of Petrobangla. Read Experts upset at govt's growing dependence on gas import Saleque, who was speaking at the seminar "Post-Covid Hydrocarbon Exploration Challenges for Bangladesh," said presently Bangladesh is following a fixed price policy for energy prices; the country is offering $6-plus per unit of gas to the IOCs while it is importing it at over $11. "In such a situation, the IOCs will not be interested to invest here. Rather, they will be up for it if there is a certain formula for setting the price in line with the global market price," he added. Read BAPEX discovers 4-layer gas in new part of Haripur Speaking at the webinar organised by Energy and Power magazine, former Petrobangla chairman Muktadir Ali said Bangladesh failed to make any breakthrough in onshore and offshore hydrocarbon exploration, only because of the gas price offered to IOCs.  "The country will face the real challenge from 2024-25 when its gas production will begin to slow down and fall below 2,000 MMCFD," he said. "Also, we should not depend too much on liquefied natural gas (LNG) import for meeting our energy demand." Read Cabinet purchase body nods LNG import Dhaka University geology department Professor Dr Badrul Imam said the government is now engaging foreign companies in the potential gas fields which were discovered by Bapex.  Petroleum geologist M Faridduddin said, "Petrobangla and Bapex could not take the right decision as they need to get approval from the concerned ministry and higher authority to explore hydrocarbons." Read Two recently-relinquished offshore gas blocks remain unexploited Former Bapex managing director Mortuza Ahmad Faruque said the Probangla executive board is now dominated by officials from the concerned ministry who do not have the technical know-how.

Energy experts at a webinar in Dhaka expressed frustration over the government’s unwillingness on hydrocarbon exploration in the country and growing dependence on gas import to meet the domestic demand.