After ExxonMobil's unsolicited offer, another US firm, Chevron, has also expressed interest to explore Bangladeshs deep offshore blocks that have so far remained unexplored despite having high potential to discover hydrocarbon resources.
"Chevron Bangladesh has submitted a proposal in this regard to the Energy and Mineral Resources Division (EMRD) a couple of weeks ago," state minister for Power, Energy and Mineral Resources Nasrul Hamid told the FE on Monday.
Chevron did not, however, specify the blocks they are interested in, he said. "We'll scrutinise the proposal before making a decision."
Sources said the US oil super-major ExxonMobil earlier submitted a similar proposal to explore all the 15 deepwater blocks of the energy-hungry country.
The revised terms in the model production-sharing contract (PSC) might have allured the US firms to come forward, they said.
In May last, top officials of both ExxonMobil and Chevron Bangladesh had discussions with Prime Minister Sheikh Hasina under the auspices of the US-Bangladesh Business Council in the USA, said sources.
ExxonMobil has proposed to complete the signing of a production-sharing contract in the first phase, followed by carrying out a 2D seismic survey within the next two years. Thereafter, it would complete the 3D seismic-data acquisition, processing and interpretation within the next three years.
It would then drill in the prospective blocks if the initial survey results become positive, said sources. It will, however, take at least eight years from now to get ExxonMobil's gas into the national grid if commercially viable reserves are discovered.
If awarded, it would be a key deal for Bangladesh as the oil giant would have to invest several billion dollars to delineate new reserves, which, in a spinoff, could boost the South Asian country's dwindling foreign-currency reserves alongside feeding into its growing appetite for energy.
In a separate proposal, Chevron Bangladesh also intends to carry out necessary surveys first before starting exploration activities in the deep sea, said sources.
Deepwater fossil-fuel exploration in Bangladesh suffered a setback following the exit of South Korean Posco International from block DS-12 in 2020.
Before packing its bags, Posco authorities had sought an extension of its PSC with better commercial terms, but Petrobangla refused to amend the deal.
The state energy corporation had earlier awarded the DS-12 block along with two other deepwater blocks -- DS-16 and DS-21 -- to a joint venture of America's ConocoPhillips and Norwegian Statoil under the 2012 bidding round. Both backed out from inking PSCs citing 'poor fiscal terms'.
Officials said launching of the country's long-awaited bidding for offshore hydrocarbon exploration is unlikely this year although the model PSC got approved by the cabinet committee on economic affairs several months back.
"State-run Petrobangla is now waiting for instructions from the EMRD," Petrobangla chairman Zanendra Nath Sarker told the FE on Monday.
Under the approved model PSC 2023, the offshore gas price for international oil companies (IOCs) will be fixed in line with the international market, which will be benchmarked with Brent crude-oil prices.
A single unit's price of offshore gas will be equivalent to 10 per cent of the three-month average of Brent crude price per barrel, meaning there will be no capping in offshore-gas pricing.
The previous 2019 model PSC had a cap set at maximum US $7.25 per Mcf (1,000 cubic feet) in offshore gas pricing, with a provision of a 1.5-percent annual hike.
The new model PSC would entitle Bangladesh to a maximum 65 per cent profit, while the minimum profit can drop as low as 35 per cent, said sources.
In the previous model PSC of 2019, the share of profit varied, depending on the amount of daily gas extraction. There were six steps of profit sharing, entitling Bangladesh up to 80 per cent of the profit. The lowest profit was 55 per cent.
Annual cost recovery has been increased to 75 per cent in the new PSC model from 70 per cent in the previous one.
The latest model PSC, however, retains provisions for gas export after meeting domestic demand and income-tax exemption for investors.
Under the new model PSC, Petrobangla may purchase hydrocarbons from exploration contractors at more than three times the current price of around US$2.75 per million British Thermal unit (MMBtu) as it is linking the price with same benchmark used to buy expensive liquefied natural gas (LNG) without capping, says another official concerned.
Under the proposed pricing formula, the corporation-offered buying price to IOCs will be around US$9.3 per MMBtu as per the current global Brent crude price at US$ 93 per barrel.
Bangladesh's offshore areas are now well-demarcated following the verdicts from international courts. Bangladesh has territorial rights of up to 200 nautical miles from the shore into the Bay of Bengal as an exclusive economic zone.
Besides, the country has free access to around 387 nautical miles into the deep sea following the demarcation of maritime boundary by international court of arbitration.
Petrobangla had floated offshore bidding rounds without any survey in 2008, 2012 and 2016. But only a few IOCs took part in the biddings, while production-sharing contracts could be inked only for four blocks.
Currently, Bangladesh has 26 open offshore and 22 onshore blocks.
Out of the offshore blocks, 15 are located in deep waters and 11 in shallow waters. Bangladesh has PSCs for two shallow-water blocks-SS-04 and SS-09 -- which are being explored jointly by India's ONGC Videsh Ltd and Oil India Ltd.
Out of the total onshore blocks, only four are awarded to IOCs.
US's Chevron has been exploring and producing natural gas in three onshore blocks - Block 12, Block 13 and Block 14 - while Singapore's KrisEnergy is producing gas from Block-9.