The launch of offshore hydrocarbon exploration bidding may not occur before the general election scheduled for January 2024. Despite gaining approval for a new and potentially lucrative model production-sharing contract (PSC) for offshore blocks, state-run Petrobangla is currently in a holding pattern, awaiting instructions from the energy and mineral resources division.
Under the new model PSC, the pricing of offshore gas for international oil companies (IOCs) will be directly linked to the international market, benchmarked against the prevailing Brent crude oil prices. this new pricing model will have no cap on offshore gas pricing, marking a significant departure from the previous 2019 model PSC, which capped offshore gas pricing at a maximum of $7.25 per Mcf.
The new PSC offers Bangladesh a substantial share of the profits, ranging from a minimum of 35% to a maximum of 65%, depending on various factors. In contrast, the previous PSC had a more complex and varied profit-sharing structure, ranging from 55% to 80%, depending on daily gas extraction levels. Under this new pricing formula, Petrobangla may purchase hydrocarbons from exploration contractors at a rate exceeding three times the current price, which is approximately $2.75 per million British Thermal units (MMBtu).
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