ExxonMobil officials in town as govt prepares March bidding round for offshore blocks

The government is planning to float an international tender in March for hydrocarbon exploration in the country’s maritime areas, where it would like US oil giant ExxonMobil to participate and show its hand in the bidding round.

The US oil major was conveyed the government’s advice when a delegation of the company, led by its Opportunity Manager Jonathan Wilson, met State Minister for Power, Energy and Mineral Resources Nasrul Hamid at his office in the ministry on Tuesday (yesterday), reports UNB.

Nearly a year ago, in March 2023, an ExxonMobil spokesperson had confirmed to Upstream, a trade publication in the oil and gas industries, that: “ExxonMobil has held initial discussions with Petrobangla regarding Bangladesh’s plans for an exploration round.”

The US giant is understood to be particularly interested in the gas potential of Bangladesh’s deep-water open blocks and also perhaps its onshore acreage.

Wilson had written a letter to the State Minister expressing his company’s interest.

Petrobangla chairman Zanendra Nath Sarker at the time said: “ExxonMobil has placed a primary proposal to negotiate on offshore blocks in deep sea as well as for some onshore blocks. The proposal is now under consideration.”

Before the general election in January this year, ExxonMobil was trying to persuade the government policymakers to accept its offer on an unsolicited basis to allow it for exploration work.

But that proposal was not accepted by the government. Now with greater clarity in the post-election scenario, the US company is once again showing its interest in exploring Bangladesh’s offshore blocks, according to well-placed sources at Petrobangla.

Certainly the presence of Jonathan Wilson himself in Dhaka now attests to that as well.

ExxonMobil is one of the handful of companies in the world that has the technical expertise and deep pockets that Bangladesh needs to boost its exploration and production sector following several disappointing licensing rounds and the exit of some other international players in recent years.

“As part of the move, the company officials met the State Minister,” a source at the Energy and Mineral Resources Division, requesting anonymity due to the inherently sensitive nature of dealing with international oil companies (IOCs), told UNB.

Meanwhile, the government has taken a decision to float international tender in the first week of March, for its offshore blocks.

Earlier, on July 26 last year, the Cabinet Committee on Economic Affairs 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.

The final approval for the draft Model PSC 2023 was given under a plan to invite the bidding round. It was speculated a September bid might be in the offing, but that eventually fell through as the election was too close and at that stage there was still too much uncertainty to be cleared up.

Now the Prime Minister’s Office has recently given a go-ahead to the Energy Division’s plan for inviting the bidding round in March. Notably the PMO’s was the last approval that was missing for a September round, so the fact that it is now comfortable to give the green light signals positive engagement from the very top.

Farhana Sharon, general manager of the Petrobangla, informed that the organisation is taking necessary steps to invite the bidding round as per approval of the PMO.

According to official sources, the new Model PSC was prepared as part of a plan to invite international bidding for offshore deep and shallow water gas blocks, to make Bangladesh more attractive to international oil companies.

Under the initiative, the gas price was tagged with the price of Brent Crude in the international market to ensure flexibility.

“Under the plan, we’re going to offer the price of gas at 10 percent of Brent Crude,” the Petrobangla official told UNB.

The official said if Brent Crude is traded at USD $75 per barrel, the gas price would be USD 7.5 per thousand cubic feet (MCF). The gas price will always remain linked to the international oil price, he said, referring to the new provision of the Model PSC 2023.

British oil & gas consultancy Wood Mackenzie has been advising the Bangladesh government and Petrobangla on the latest PSC revisions.

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 the offshore blocks, 24 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 work has 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.

Currently, about 2300 mmcfd gas is being produced from 22 gas fields in the country, while about 600 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1200 mmcfd daily.