ExxonMobil to bid for offshore oil, gas exploration, bidding next month

ExxonMobil, a US-based oil-gas exploration giant, has formally expressed interest in exploring oil and gas reserves in Bangladesh's offshore blocks, according to Energy Division officials.

Officials said two representatives from ExxonMobil met with the Minister of State for Energy Nasrul Hamid on Tuesday.

To enhance gas supply within the next three to four years, the government has taken several initiatives, encompassing both the drilling of new gas wells and the workover of existing ones, alongside offshore exploration efforts.

"ExxonMobil formally approached us for the first time. Tenders will be called for oil and gas exploration in the deep sea at the beginning of March," Energy Secretary Nurul Alam told The Business Standard.

He also said US energy company Chevron has informally expressed interest in participating in the bidding process. Following the invitation for tenders, six months will be allocated for the evaluation of the bids.

Zanendra Nath Sarker, chairman of Petrobangla, also told TBS that bidding will start in the first week of March. Efforts will be made to ensure participation through Bangladesh's embassies worldwide, and roadshows will also be conducted to attract participants.

He noted that several international companies have already expressed interest in oil and gas exploration in Bangladesh. The exact number of participating companies will be disclosed post-tender. However, he declined to specify the number of blocks slated for tender.

During the Cabinet Committee on Economic Affairs meeting on 26 July last year, the policy "Bangladesh Offshore Model Production Sharing Contract (PSC) 2023" was approved for making offshore oil and gas exploration agreements.

According to the policy, the government will procure gas from offshore gas exploration firms at a rate of 10% of the market price of crude oil per barrel on the international market, equating to $10 per thousand cubic feet of gas if a barrel of crude oil sells for $100. 

The policy also stipulates that if the market price of oil rises, the government's expenditure will increase, and conversely, it will decrease if the price falls. Nonetheless, the government will receive a portion of the total gas extracted at no cost, the extent of which will be determined through negotiations between mining or exploration companies and the government. Gas prices will remain uniform across both shallow and deep seas. 

Additionally, a multi-client survey was conducted last year to assess the quantity of mineral resources within Bangladesh's maritime boundaries.

Gas supply on the wane

Gas supply from domestic gas fields is dwindling. According to Petrobangla's data, the current daily supply from the country's active gas wells averages around 2,000mmcf. Additionally, imported LNG contributes between 600mmcf and 650mmcf per day to the overall supply.

Meanwhile, the country's gas demand is steadily rising. In addition to the industrial sector, a substantial amount of gas is needed for power generation. Currently, approximately 2,300mmcf of gas per day is necessary to operate all gas-based power plants nationwide. Additionally, there is demand from both the industrial and residential sectors.

According to Petrobangla, the country's gas demand is around 4,000 million cubic feet per day (mmcfd), but the average supply is only 2,700mmcf, including 644mmcfd from imported LNG, resulting in a shortfall of approximately 1,300mmcfd.

The growing import reliance on LNG is a consequence of unmet demand. To address soaring demand and to reduce dependence on expensive LNG imports amid dollar shortage, state-owned Petrobangla has laid out an ambitious plan to significantly boost domestic gas production, which includes drilling 100 new and old wells between 2025 and 2028.

Petrobangla is currently implementing another project for drilling 48 exploratory, development, and work-over wells to boost gas production by an additional 618mmcfd.