Tax immunity, other facilities to attract foreign cos in offshore gas bidding: PM's energy adviser

Many foreign companies are likely to express interest in offshore bidding for oil and gas exploration due to the facilities provided by the government, Prime Minister's Power, Energy and Mineral Resources Advisor Tawfiq-e-Elahi Chowdhury said Monday (11 March).

"Companies participating in offshore bidding will be exempted from all taxes," he said at a press conference on offshore bidding at Petrobangla office in the morning.

Tawfiq-e-Elahi emphasised the appealing aspects and advantages of this bidding process, highlighting the alignment of prices with Brent crude.

"If the price of crude goes up, the companies will benefit and if it goes down, we will be benefited," he added.

The energy adviser said, "We are hoping to get a massive response from interested companies. Gas pricing in sync with Brent crude oil is positive for us." He highlighted additional aspects that make the bidding process interesting, such as the opportunity for a 4-year survey for interested parties.

State Minister for Power, Energy, and Mineral Resources Nasrul Hamid echoed the desire for reputed companies to participate in the bidding process to ensure competitiveness. He mentioned plans for promotional seminars post-Ramadan with anticipated international participation.

He said, "I started this work in 2016. It's been three years since we did the multi-client survey. The data of 13,000 square kilometres is now in our hands. Several countries, including the United States, have expressed interest. This bidding is expected to be held competitively."

"We have gotten a huge response unofficially. Already some multinational companies brought forward survey data," said Secretary of Energy and Mineral Resources Division Nurul Alam.

He said, "We should focus on generating our own resources by reducing import dependence. Not only offshore, but also onshore oil and gas exploration work has to be done. In this case too, we want to attract foreign companies.

Petrobangla recently floated a new international tender for oil and gas exploration in 24 blocks, with 15 in deep waters and nine in shallow waters in the Bay of Bengal. 

Speaking at the conference, Petrobangla Chairman Zanendra Nath Sarkar mentioned that multinational oil and gas companies will have six months, until 9 September, to submit tenders, and the contract durations for oil and gas will be 20 and 25 years, respectively.

He highlighted the attractiveness of the offer, mentioning an opportunity for contractors to recover up to 75 percent of the investment cost per annum. He believes this will expedite investment and make it a win-win situation for both parties.

However, he did not disclose the number of multinational companies interested in the tender.

According to Petrobangla, the last offshore oil and gas exploration tender was called in 2016.

A new Production Sharing Contract (PSC) was signed in 2019, but no bidding was called. After nearly four years, the cabinet approved the new PSC last July.

According to PSC-2019, the price of every 1,000 cubic feet of gas was fixed at $7.25 for deep waters and $5.5 for shallow waters.

However, there is no set price for the new PSC model-2023.

The gas price has been fixed at 10% of the price of Brent crude oil – the most traded of all the oil benchmarks in the world.

If the price of fuel oil increases or decreases in the world market, the price of gas will also increase or decrease proportionally.

At present, the price of crude oil is $80 per barrel. According to this, the price of gas extracted from the Bay of Bengal will be $8.

But if the price of fuel oil is $100, the gas price will be $10.