Uncertainty looms large over the invitation of a planned international bidding for hydrocarbon exploration in the country’s gas blocks due to the coronavirus impact on the global economy.
According to official sources, state-owned Petrobangla had planned to announce the bidding round on March 17 marking the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman.
“But the global coronavirus pandemic forced Petrobangla to shelve the plan and the government also suspended birth centenary programmes,” a senior Petrobangla official told UNB.
He said the plan to invite international bidding on March 17 with fixing a schedule for international oil companies (IOCs) to submit proposals between October 2020 and March 2021.
“We had laid out the plan keeping in mind to complete the evaluation of offers and sign contracts with selected companies between March-October 2021 so that they can start exploration in November that year,” said Shahnewaz Parvez, General Manager (Contract) of Petrobangla.
Earlier, the government amended the model production sharing contract (PSC) for both offshore and onshore gas blocks to pave the way for inviting international bidding in March 2020.
Through those amendments, the IOCs were given more incentives to attract them to invest in the country for exploration of oil and gas.
Petrobangla sources said the incentives include allowing the IOCs to export their share of gas from deep sea blocks to any third party outside the country with first right of refusal by Petrobangla and local companies.
Secondly, the price of gas was increased when it comes to purchase by Petrobangla as the government entity, Petrobangla officials said.
They said the country has now 48 blocks of which 26 are located in offshore areas and 22 in onshore areas.
Of these, 21 offshore blocks were planned for international bidding as PSC remained active in five blocks while 18 onshore blocks are ready for bidding as four PSC is active in four such blocks.
Petrobangla officials said with the coronavirus pandemic the international bidding has become uncertain as the prices of oil and gas have come down to their lowest in 30 years.
“Most of the IOCs will go for cost-cutting measures to survive the recession,” said another top official of Petrobangla adding that in such a situation no IOCs will be interested to invest in hydrocarbon exploration business.
Echoing the same concerns, eminent energy expert and Professor of Chemical Engineering Department of BUET Dr Ijaz Hossain said it is very difficult to say when it will be possible to overcome the situation.
“It may take years for the IOCs to rejuvenate themselves in the exploration activities,” he said.
Energy experts said it is a common phenomenon that when oil price drops in the global market, the IOCs feel discouraged to go for investing in exploration works.
Meanwhile, Bangladesh settled its dispute with neighbouring Myanmar and India over the maritime boundary almost eight years ago. It has had no success in exploration of oil and gas in its offshore areas located within its maritime boundary, said an energy expert.