Monday, 2 October, 2023

Bidding on offshore oil, gas blocks likely after election

Bangladesh will also settle the ongoing negotiations with ExxonMobil

Bangladesh will invite bids on offshore oil and gas blocks in the Bay of Bengal after the national election expected to be held in January, 2024.

“We have to complete the offshore seismic data survey first. So, the offshore bidding round would not be possible before the national election,” said State Minister for Power and Energy Nasrul Hamid.

He said that the bidding round would be held after the election as “we expect to get actual data on oil and gas resources in the Bay.

Responding to a query, the state minister said, “We will reach a final decision about the ExxonMobil proposal of investing a maximum $30 billion in the country's offshore blocks after getting data on seismic survey.”

He, however, added, “It’s unlikely to reach an agreement with them (ExxonMobil) before the election.”

The US company proposed to sign a non-binding memorandum of understanding (MoU) with Petrobangla in the current month.

Besides, the government approved a draft Bangladesh offshore model Production Sharing Contract (PSC) 2023 to explore oil and gas in the Bay of Bengal.

The hydrocarbon price is set at 10 percent of three months of average Brent crude.

Petrobangla had invited offshore bidding rounds without any survey in 2008, 2012 and 2016. But only a few IOCs took part in the biddings, while production-sharing contracts (PSCs) could be inked only for four blocks.

Currently, Bangladesh has 26 open offshore and 22 onshore blocks.

Out of the offshore blocks, 15 are located in deep waters and 11 in shallow waters. Bangladesh has PSCs for two shallow-water blocks-SS-04 and SS-09 -- which are being explored jointly by India's ONGC Videsh Ltd and Oil India Ltd.

US energy giant ExxonMobil, however, has proposed to conduct a 2D seismic survey in the Bay of Bengal in November this year under a $30 billion investment proposal in Bangladesh.

ExxonMobil will invest $40-50 million in 2D seismic survey for the evaluation of Bangladesh’s deep-water mineral resources.

“In a success case, a further $50-100 million would be invested in 3D seismic, $80-100 million for each well and $10-$30 billion for deep-water blocks development,” ExxonMobil new opportunities manager Janathan Wilson wrote to State Minister for Power and Energy Nasrul Hamid recently.

He said a successful development offers the chance of saving up to $3 billion per year to a long term LNG contract.

According to the ExxonMobil proposal, it seeks to sign the MoU prior to commencing negotiation, officials confirmed.

“Once an MoU has been signed, we will be ready to progress negotiations, which I presume will be via the negotiation committee,” Janathan Wilson said.

ExxonMobil proposed to start the 2D seismic survey in the coming dry season in November, the proposal said.