Bangladesh Invites Bids for Offshore Oil and Gas Exploration with Improved Terms
Bangladesh launches fresh offshore oil, gas tender with sweeter terms for foreign firms
Image: The Economic Times
Bangladesh has launched an international tender for oil and gas exploration in 26 offshore blocks in the Bay of Bengal, aiming to attract foreign investment with revised, more favorable terms. The deadline for bid submissions is November 30, 2023, as the country seeks to address gas shortages and reduce reliance on costly LNG imports.
- 01The tender includes 15 deep-water and 11 shallow-water blocks in the Bay of Bengal.
- 02Under the revised Production Sharing Contract, companies will now relinquish only 20% of exploration acreage, down from 50%.
- 03Mandatory contributions to the workers' welfare fund have been reduced from 5% to 1.5%.
- 04The new gas pricing formula links deepwater prices to Brent crude oil, allowing contractors to earn up to 11% of the average Brent price.
- 05Previous licensing rounds failed to attract bids, prompting these changes to boost investor interest.
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Bangladesh has initiated an international tender for oil and gas exploration in 26 offshore blocks located in the Bay of Bengal, aiming to enhance domestic gas supply while reducing reliance on expensive liquefied natural gas (LNG) imports. The tender, announced by state-run Petrobangla, is set against a backdrop of declining gas reserves and increasing energy prices due to geopolitical tensions. Energy Minister Iqbal Hassan Mahmood emphasized that the revised terms under the Bangladesh Offshore Model Production Sharing Contract (PSC) 2026 are designed to attract foreign companies. The deadline for bid submissions is November 30, 2023. Notable changes include a reduction in the relinquishment of exploration acreage from 50% to 20% and a decrease in mandatory contributions to the workers' welfare fund from 5% to 1.5%. Additionally, the pricing formula for deepwater gas has been revised to link prices to Brent crude, allowing contractors to receive up to 11% of the average Brent price, with a floor of $70 and a ceiling of $100 per barrel. Despite resolving maritime disputes, Bangladesh has yet to make significant offshore gas discoveries, contrasting with exploration successes in neighboring countries.
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These changes aim to boost domestic gas production, potentially stabilizing energy prices and reducing the financial burden of LNG imports on consumers.
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