The government for the next hydrocarbon block bidding is likely to increase the gas price by up to 10 per cent, the rate at which Petrobangla buys gas from international oil companies under Production Sharing Contract, said an energy division official.
The state-run oil, gas and mineral resources corporation Petrobangla for the Bidding Round-2011 has also proposed to change some other provisions of the model PSC-2008 before floating international tender.
Energy secretary Mohammad Mesbah Uddin on April 6 said that Petrobangla would call fresh international bidding for oil and gas exploration in the land and shallow sea area in the Bay of Bengal by June.
The state-run oil, gas and mineral resources corporation Petrobangla has sent the proposal to the energy ministry for its opinion.
The official said that Petrobangla had proposed to increase the price of gas that would be extracted from the country's western part, shallow and deep sea area in the Bay of Bengal. Petrobangla wanted to keep the price of gas from other on-shore areas unchanged.
When asked, Petrobangla chairman Hossain Monsur refused comments on the issue.
Petrobangla has proposed to increase the price of gas at the rate the contractor will sell it for cost recovery and sharing profit with Petrobangla.
According to the proposal, the corporation or its affiliates will buy the contractor's share of gas and pay it $4.157 for 1,000 cubic feet of natural gas extracted from the western part onshore and shallow sea area instead of $2.87 and $2.9 respectively.
For deep sea gas, Petrobangla will pay the contractor $4.573 for one unit of its share of natural gas.
Petrobangla also proposed to scrap the controversial provision for conditional gas export though it keeps another such provision for conditional gas sales to the private sector unchanged, the official said.
According to the latter provision, a contractor has the option to sell its share of natural gas to private sector in the domestic market, subject to Petrobangla's right of first refusal.
Activists and experts have demanded scrapping of the two conditional provisions for gas export and sales to the private sector from the model production sharing contract.
Petrobangla on May 16 signed a deal with oil company Santos, successor of Cairn Energy, allowing it to sell gas directly to private sector from hydrocarbon block-16.
Cairn in 2009 threatened to withdraw its investment from the Bay if Petrobangla did not allow it to maximise its profit.
After getting the right to sell gas to the private sector at higher prices, Carin sold its stake to Santos last year.
Santos will sell gas directly to the private sector at negotiated prices if Petrobangla does not buy gas from it at the price it sets.
Santos set the minimum price at $4.5 per thousand cubic feet, but Petrobangla has been buying gas at $2.9 from the Sangu field in block-16.
About allowing IOCs to sell the gas of their share directly to the private sector in the next PSC for the bidding round 2011, the prime minister's energy adviser Tawfiq-e-Elahi Chowdhury on April 6 said that some changes might come in the model PSC in the changed perspective.
It also proposed to revise the contract terms and the hydrocarbon blocks specified in the model PSC-2008.
According to the proposal, an IOC will have four years for initial exploration work and complete the task in the rest of the area specified in the contract in next three years.
In the model PSC- 2008, an IOC is bound to conduct a minimum exploration work that involves only geological and geophysical surveys with no commitment for exploratory drilling and complete exploration work over the rest of the contract area in next two phases in two years each.
Petrobangla proposed to divide the whole territory into 53 hydrocarbon blocks among which 23 would be in land and the rest 30 in the Bay of Bengal.
In land, Petrobangla proposed to divide hydrocarbon block 2, 3, 4 and 6 into A and B sub-blocks and 22 into A, B and C sub-blocks.
In the Bay, Petrobangla proposed to define shallow sea (SS) by 10 from SS-01 to SS-10 and deep sea (DS) by 20 hydrocarbon blocks from DS-09 to DS-28.
Source : New Age
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