State-owned Petrobangla shortlisted four foreign firms in the process of hiring a consultant for making its Model Production Sharing Contract (PSC) more attractive to foreign investors interested in off-shore gas exploration.

According to official sources, the companies are IHS Global, Gaffney Cline Associates, Wood Mackenzie, and Price Water house Coopers Pvt Ltd.

The four companies, out of eight, were technically qualified in a bidding process followed by Petrobangla.

"Now, we will place the names with their respective proposals to the Petrobangla Board. If it approves, then their respective financial offers will be opened for selecting one of them", said a top official of the state hydrocarbon corporation.

Officials said that earlier a total of eight firms had submitted their respective Expressions of Interest (EOI) to Petrobangla of which five were from the United Kingdom and one each from India, Singapore and the United Arab Emirates (UAE). Through a scrutiny process, four were shortlisted.

The Petrobangla received their proposals on November 21, the deadline for submission of the EOI.

Confirming the latest development Shahnewaz Parvez, General Manager (Contract) of Petrobangla, said that it is not possible to say which one will finally be selected for the job until their financial offers are opened and evaluated.

He said once the consultant is appointed, it will mainly help Petrobangla to further amend the Model PSC 2019, to attract international oil companies (IOCs) amid the volatile international fuel market.

He noted that the principal upstream energy body will appoint an experienced foreign consultant to draw up the amendments that would convince the IOCs to invest in Bangladesh's offshore gas exploration.

Official sources said the recent excessive hike in petroleum fuel price, especially that of the liquefied natural gas (LNG) has prompted the government to go for further amending the existing PSC so IOCs get interested to bring their money here.

The country has a total of 48 blocks of which 26 are located offshore and 22 onshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water while 15 are located in deep sea (DS) water areas.

Of these, 24 offshore gas blocks remain open for IOCs while two blocks -SS-04 and SS-09-are under contract with a joint venture of ONGC Videsh Ltd and Oil India Ltd where drilling works have recently started.

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.

There was a target to invite international bidding in March 2020 for exploration in offshore areas, but that got postponed due to the Coronavirus pandemic that emerged at exactly the same time.

"The recent upward trend in oil and gas price has pushed the policymakers to further raise the gas price by introducing much more flexibility and incentives including keeping the export option open in the PSC," said another Petrobangla official.

He dropped an indication that gas price might be increased up to $7.25 per MCF for shallow sea blocks while $8.5 per MCF for deep sea blocks considering the upward global trend in petroleum price.

He mentioned that the government had to import LNG at $36 per MMBtu while it was just below $10 early this year.

Recently, the World Bank in its outlook for the year ahead predicted that the petroleum price may not fall until the end of 2022 although recently the price declined by $10.

The latest Russian invasion of Ukraine has further deepened the global market volatility pushing up the petroleum fuel price over $100 per barrel, the highest in the last 7 years.

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 government also buys the IOC's gas at a certain price. So, if gas price is raised, IOCs feel encouraged to invest in exploration works, said the Petrobangla officials.

They said this is the first time, at least a 15-year experienced foreign firm will be hired to help the government to prepare the amendments in the PSC as foreign companies can give best suggestions as to what kind of incentives be offered to attract IOCs.

Officials said the Energy Division had instructed Petrobangla to hire such a consultant in February this year. But negligence of some top officials delayed the work.

They said Petrobangla now plans to complete the appointment of consultants within the next two months and receive their report by April next. It hopes to complete the amendments by May and invite international bidding for IOCs in June this year to start exploration works before the end of 2022.

Officials said that the foreign contractor, which was awarded a contract to conduct multi-client seismic survey in the offshore sea blocks, also suggested updating the Model PSC to attract IOCs in the changed scenario in the global petroleum market.

Bangladesh's offshore area remained unexplored despite the settlement of its dispute with neighbouring Myanmar and India over the maritime boundary almost eight years ago.

It has had no success in the exploration of oil and gas in its offshore areas located within its maritime boundary, said an energy expert wishing not to be named.