Photo: Collected
The deadline for submission of international tenders for offshore oil and gas exploration in the Bay of Bengal has been extended by an additional three months, causing further delays in the exploration of this promising area.
The new deadline now stands at December 9, 2024. This extension is aimed at addressing the insufficient response and applications from multinational companies, according to sources within Petrobangla.
Petrobangla, the state-owned corporation responsible for the exploration, production, transportation, management, and sale of Bangladesh's oil, natural gas, and mineral resources, has faced challenges in attracting adequate international interest.
The initial tender invitation, issued on March 10, 2024, sought proposals from 55 of the world’s leading oil and gas companies. Although six major multinational companies have purchased the tender documents, the response has been slower than anticipated.
The companies that have shown interest include U.S. giants ExxonMobil and Chevron, Malaysia's Petronas, the Norway-France joint venture TGS and Schlumberger, Japan's Inpex Corporation and Jogmac, China's Sinuc, Italy's Eni SPA, Singapore's Chris Energy, and India's ONGC. Despite these expressions of interest, the number of formal submissions has not met expectations, prompting the extension.
Janendra Nath Sarkar, Chairman of Petrobangla, explained to The Daily Messenger, “Several multinational companies requested an extension to the tender period. In response to their requests, we have extended the deadline by three months. This extension is expected to increase participation from additional companies.”
The Bay of Bengal, which contains 26 blocks under Bangladeshi jurisdiction, features 15 blocks in the deep sea and 11 in shallower waters. Historically, international interest has fluctuated. In 2010, ConocoPhillips conducted a two-dimensional survey on two deep-sea blocks but abandoned further work due to unmet demands for increased gas pricing. Similarly, Australia's Santos and South Korea's Posco Daewoo exited after initial engagements. Currently, India's ONGC is the sole operator, exploring two shallow sea blocks. The remaining 24 blocks are up for tender.
To make the Production Sharing Contract (PSC) more appealing to foreign investors, Petrobangla has introduced several attractive features. Unlike previous PSCs where gas prices were fixed, the new terms tie the gas price to the international market price of Brent crude. Specifically, the price of gas is set at 10% of the Brent crude price.
For example, if Brent crude is priced at $80 per barrel, the gas price would be $8 per 1,000 cubic feet.
Additionally, the government's share of the revenue has been reduced to incentivize participation.
A senior Petrobangla official, speaking on condition of anonymity, mentioned that a series of meetings with interested companies will be scheduled early next year if the tender period concludes in December. The final selection process will involve evaluating the proposals, and once a suitable company is chosen, a contract will be signed. However, even after the tendering process is completed, it may take seven to eight years before gas extraction begins.
Professor Badrul Imam, a renowned geologist and energy expert, offered a critical perspective. He told The Daily Messenger, “While extending the tender period may encourage more foreign companies to participate, it’s not an ideal solution. We are already lagging in offshore exploration, and the delay only exacerbates the issue. There is a significant potential for discovering large gas reserves in the Bay of Bengal. Early research could open new opportunities for the country.”
The Bay of Bengal’s potential has been underscored by previous surveys. German company Schlumberger conducted a multi-dimensional survey that has provided valuable data, now available for purchase by interested bidders. Additionally, Petrobangla holds data from a two-dimensional survey conducted by ConocoPhillips, which indicates the presence of gas in the region. However, definitive proof of recoverable reserves will require drilling exploratory wells—something that has yet to occur. Notably, neighboring countries India and Myanmar have successfully discovered gas in similar maritime areas, adding to the region's allure.
In conclusion, while the extension of the tender submission deadline provides a necessary opportunity for increased international participation, it also highlights ongoing challenges in accelerating the exploration and development of the Bay of Bengal’s offshore resources. The upcoming months will be crucial in determining whether the extended period will indeed attract the necessary interest and investment to unlock the region’s potential.
Messenger/Disha
