Dhaka: Petrobangla is preparing a tender for oil and gas exploration in the hilly areas on the model of offshore PSC (production and sharing contract). Petrobangla Chairman Janendra Nath Sarkar has announced that an international tender will be invited by March.
The Petrobangla Chairman told Barta24.com that the draft of the onshore PSC has been prepared on the model of offshore PSC. The process of appointing consultants is underway to finalize the draft. We hope to be able to complete all the processes by February. And we want to invite tenders in March. Although there is a possibility of obtaining a lot of gas, no work has been done in the hilly areas so far. We hope that there are a lot of gas reserves there.
In response to a question about what the gas price might be, the Petrobangla Chairman said that the price has not been finalized yet. The consultant will give his opinion and then we can say, but it will definitely be lower than the ocean.
Petrobangla sources said that PSC-2023 has been finalized with many concessions including an increase in gas prices from Model PSC-2019. The price of gas per thousand cubic feet has been set at 10 percent of the price of Brent crude. That is, if the price of Brent crude is 80 dollars, the price of gas will be 8 dollars. In the previous PSC, the price was fixed at 5.6 dollars and 7.25 dollars in shallow and deep sea, respectively. Along with the price, the government's share ratio has also been reduced. According to Model PSC-2019, with the increase in gas production, Bangladesh's ratio continues to increase. And the share of multinational companies continues to decrease. Bangladesh's share in deep sea will fluctuate from 50 to 75 percent and in shallow sea from 50 to 80 percent. In light of that, tenders have been invited for oil and gas exploration in the sea.
Tenders for onshore blocks 22 and 22(a) (hilly area) are being finalized on the basis of that PSC.
Bapex sources said that although the price of offshore gas is assumed to be 10 percent of Brent crude, 8 percent of Brent crude has been proposed for onshore. Since there is not enough information about the Chattogram Hill Tracts, it is difficult to extract oil and gas, build roads, and construct pipelines if gas is found. Therefore, the price has been increased slightly compared to the past PSCs for onshore.
Petrobangla sources said that under the existing law, there is no scope for Bapex or Sylhet Gas Field Company to enter into a block agreement with any other company. Only Petrobangla can enter into an agreement. A formula has been made that Bapex will come up with a proposal for a JV with a foreign company, which Petrobangla will approve. Bapex will not make any investment here, its investment is land. If oil and gas are found, Bapex will get a certain share from the shares that IOC will give to Petrobangla. This formula will also be applicable to other companies.
The first well (Sitakunda) was drilled in the hilly region of Bangladesh in 1914 by the Burma Oil Company. Then in 1922, a well was drilled in Patharia. About 12 wells have been drilled, the last well was drilled in Halda (1998). Of these, gas was found in Semutang 1, 2, 3 and 4, but it was reported that it was not commercially extractable. It was reported that there was a small reserve in any other well, and no signs of gas were found in Halda, Semutang-5, Patiya.
The concerned people have reported the possibility of obtaining a lot of gas in Bangladesh. From 1986 to 2001, 9 internationally renowned organizations worked to assess the potential of oil and gas resources in Bangladesh. Some organizations conducted exploration activities throughout the country and some in specific areas. In 2001, the United States Geological Survey (USGS) and Petrobangla, the Hydrocarbon Unit and the Norwegian Petroleum Directorate conducted surveys. The USGS-Petrobangla report has indicated a minimum of 8.4, an average of 32.1 and a maximum of 65.7 TCF (trillion cubic feet) of gas. On the other hand, the Hydrocarbon Unit and the Norwegian Petroleum Directorate have indicated a minimum of 19, an average of 42 and a maximum of 64 TCF of gas. A total of 29 gas fields have been discovered in Bangladesh. On November 16, 771 million cubic feet of gas was extracted from 73 wells in 16 gas fields under domestic companies and 1,180 million cubic feet of gas was extracted from 43 wells in 4 gas fields under multinational companies. At one time, up to 2,800 million cubic feet of gas was extracted. Production has decreased in many wells due to declining reserves. 5 gas fields (Rupganj, Kamta, Feni, Chhatak and Sangu) have been declared abandoned. 3 gas fields (Kutubdia, Bhola, Elisha and Zakiganj) are closed due to lack of gas pipelines.
Although Bangladesh has a high success rate, many now think it is a fluke. However, Petrobangla has broken that trend and returned to speed. Experts see a ray of hope in increasing gas reserves and production if continuity is maintained. The first well was drilled on the territory of Bangladesh in 1911. In 112 years, about 99 exploration wells have been drilled. And Petrobangla wants to drill 70 exploration wells in 3 years. In addition, the tender process in the sea is continuing.