Petrobangla's tender to select an international consultancy firm "for Up-gradation of the Bangladesh Offshore Model Production Sharinq Contract 2019" has drawn the interest of eight firms, including five from the UK.

Upgrading its Model PSC, or MPSC, is now seen as essential by officials at the state hydrocarbons agency, to attracting the interest of the international oil companies in the country's offshore areas.

According to official sources, apart from the five from Britain, which prides itself on providing some of the most highly-skilled manpower and ancillary services to the oil and gas industry, Expressions of Interest were also submitted by firms based in Singapore, the UAE, and India.

From talking to various well-placed officials at Petrobangla, it was learned that all 8 EOIs were received on November 21st, the deadline advertised in the tender, although with a day left and the inbox bare as bones, they probably would have allowed an extension of a day or two. No need in the end.

"Now we will scrutinise their proposals and pick one of them to do the job," said Shahnewaz Parvez, General Manager (Contract) of Petrobangla, sounding quite spoilt for choice.

He said that in view of the changed circumstances in international energy markets, the consultant would be expected mainly to advise on some specific amendments that would help to make Bangladesh's offshore MPSC attractive to the IOCs in this new business environment emerging out of the post-Covid recovery.

The GM (contracts) noted that an experienced foreign consultant would be appointed to draw up the amendments that would convince the IOCs to invest in Bangladesh's offshore gas fields.

Official also kept insisting that it was the record rally in fuel prices, LNG in particular, that convinced them of the need to explore Bangladesh's offshore gas blocks anew, by further amending the existing MPSC if need be, to attract the IOCs.

Under a Model PSC, normally, if any IOC discovers gas, it gets 40 per cent stake while the government obtains the remaining 60 per cent.

The MPSC also stipulates the price at which the government buys the gas extracted by the IOC. So if the price is raised, logic dictates that IOCs would be encouraged to invest in costly exploration works, said the Petrobangla officials.

Twenty-six of the country's 48 blocks are located offshore - 11 in shallow sea (SS), and a further 15 in areas designated as deep sea (DS).

Never having developed the technical expertise to tend to its own yard offshore, the government is frequently left to deal with the IOCs, that tend to be some of the most powerful privately-owned corporations in the world.

Of the 26 OS blocks, currently just two, both in shallow waters, are contracted out to a joint venture of two firms owned by the Indian state: ONGC Videsh Ltd - the international arm of India's own hydrocarbons agency -and Oil India Ltd.

Petrobangla has been trying for the past number of years to draw the attention of the IOCs to these two dozen blocks. Yet it is sad but true, that it has very little to show for these efforts.

The government had last amended the Model PSC in mid-2019, whereby the price of gas for any participating IOC, that is, the price at which they would sell the gas to the government, was raised to $5.5 per thousand cubic feet (MCF) for shallow water blocks, and $7.25 per MCF for gas extracted from its deep sea blocks, to reflect the higher investment as well as risk involved in DS exploration.

Raising the stipulated price in the MPSC was meant to make it more attractive to the IOCs to explore in Bangladeshi waters.

In line with the amended PSC, there was a target to invite another round of international bidding for exploration in Bangladesh's offshore blocks in March 2020 - but this obviously had to be postponed due to the Coronavirus pandemic, that had taken over almost the entire world by then.

But was it really just the pandemic, or have Petrobangla officials throughout these months never felt ill-at-ease at times, at what has transpired as a gradual waning of interest in our offshore blocks? And isn't such a realisation the more likely reason behind the quite drastic set of measures that have entered the realms of possibility in Bangladesh cricket:

"The recent upward trend in oil and gas prices has pushed the policymakers to further raise the gas price if needed, and to introduce much more flexibility and incentives for oil companies- even going as far as keeping the export option open in the PSC," said another Petrobangla official.

He is referring to the bar imposed on IOCs from exporting any of the gas they may discover - at least till such time that Bangladesh's needs are all met. The government effectively exercised a right of first refusal

The same official also dropped an indication that considering the upward global trend in energy prices, the gas price stipulated in the Model PSC may be hiked up to $7.25 per MCF for shallow sea blocks, and $8.5 per MCF for deep sea blocks.

He noted that the government was importing LNG at $36 per MMBtu, an almost four-fold increase from just below $10 earlier in the year.

Recently, the World Bank also made a prediction that the petroleum price might not see any fall until the end of 2022 although recently the price declined again by $10.

That is why for the very first time, a foreign firm with at least 15 years' experience will be contracted to help the government amend the PSC effectively - with just the right balance of incentives, conditions, and price on offer to attract IOCs.

Petrobangla officials are convinced only a foreign consultancy firm with industry experience can help them arrive at that delicate balance.

The Energy Division (within the Energy, Power and Mineral Resources Ministry) had in fact instructed Petrobangla to hire such a consultant in February, but some top officials' negligence delayed the work.

Petrobangla now plans to complete the appointment of a suitable consultant within the next two months, and expects to receive their report by next April. With a month thereafter to push the amendments through, top officials are optimistic of being able to invite international bidding from IOCs based on the new Models PSC next June, so that exploration works can get underway before the end of 2022.

It is also learnt that the foreign firm that was contracted to conduct a multi-client seismic survey in the country's offshore sea blocks, was also of the opinion that the Model PSC needed to change, in the context of the changed scenario in the global oil market.

Bangladesh's offshore resources remain largely unexplored, despite the much-touted settlement of its dispute with neighbours Myanmar and India over the demarcation of its maritime boundary almost eight years ago.

It has had no success in exploration of oil and gas in its offshore areas located within its maritime boundary, said an energy expert wishing not to be named. Surely we would be better served to know the true picture of what actually is the potential here to find hydrocarbon deposits that are feasible to recover.