The government has taken initiatives to launch fresh bid rounds offering both onshore and offshore hydrocarbon blocks to international oil companies (IOCs) in a bid to safeguard the country’s future energy security amid the escalating Middle East (ME) crisis.

Energy and Mineral Resources Division (EMRD) Secretary Mohammad Saiful Islam said preparations are underway to announce the bidding process as part of the government’s 180-day action plan.

A total of 47 exploration blocks will be placed on offer, including 21 onshore and 26 offshore blocks, he added.

To attract foreign investors, state-run Petrobangla has revised the draft Model Production Sharing Contract (MPSC). Petrobangla Chairman Md Arafanul Hoque said the mandatory contribution to the Workers’ Profit Participation Fund (WPPF) has been cut to 1.5 percent from the previous 5 percent.

He said the authorities have also decided to relax obligations regarding the construction of hydrocarbon pipelines after discovery and during subsequent operations.

According to Petrobangla officials, a fresh offshore bidding round will be launched soon after receiving approval from the energy ministry.

Earlier, the latest offshore bidding failed to attract any IOC participation, although several international firms had purchased bid documents. Market insiders said the absence of bids stemmed from limited geological data and lack of investor confidence.

Petrobangla had invited bids through an international tender on March 10, 2024, keeping the offer open for nine months.

In that round, 24 offshore blocks were offered for exploration leases, including 15 deep-sea blocks and nine shallow-water blocks.

Under the previous bidding framework, gas prices were linked to 10 percent of Brent crude oil prices in the international market. Under this mechanism, if Brent crude is traded at $100 per barrel, the gas price would stand at $10 per million British thermal units (MMBTu).

The pricing formula was identical for both deep-water and shallow-water blocks, and the price had no upper cap.

Petrobangla would purchase gas produced by IOCs at the Brent-linked rate, meaning the price could fluctuate depending on global oil market trends.

Foreign companies were also allowed to export natural gas after meeting domestic demand, following Petrobangla’s first right of refusal. They were further offered facilities for full profit repatriation, interest assignment, share transfer, and 100 percent cost recovery, subject to a 75 percent annual ceiling.

Contractors were required to carry out a mandatory work programme, including 2D seismic surveys and the purchase of available 2D multi-client seismic data.

Over the past decade, Bangladesh has arranged only one bidding round in 2017, which involved three deep-water blocks, according to Petrobangla data.

South Korea’s Posco-Daewoo was awarded deep-water Block DS-12, but the company later withdrew from the block in 2020 after completing a 2D seismic survey.

Previously, Petrobangla launched another bidding round in 2012, through which three shallow-water blocks and one deep-water block were awarded to contractors.

For onshore blocks, Petrobangla has prepared a revised MPSC linking gas prices to 8 percent of dated Brent crude, with a cap on the crude price, sources said.

Under this market-based formula, the gas price for onshore blocks could rise to nearly $8 per MMBTu if Brent crude stands at $100 per barrel, which is almost three times higher than the rates under existing contracts.

Currently, US-based Chevron receives about $2.76 per MMBTu for gas supplied to Petrobangla, while Singapore’s KrisEnergy gets around $2.31 per MMBTu under the existing pricing mechanism linked to HSFO.

Meanwhile, Bangladesh imports LNG from long-term suppliers Qatar Energy and OQ Trading International, with prices ranging between $12.50 and $13.50 per MMBTu, according to sources.

At present, four IOCs operate under production sharing contracts in Bangladesh. Chevron produces gas from onshore Blocks 12, 13 and 14, KrisEnergy operates the Bangura field under Block 9, while ONGC Videsh and Oil India jointly explore shallow-water blocks SS-04 and SS-09.