Bangladesh Government Pushes for Gas Exploration in Bay

As part of a measure to resolve future gas crisis, the government of Bangladesh in October may announce the third round of block bidding for oil and gas exploration in the offshore and deep-sea areas of the Bay of Bengal. However, the government is reportedly also ready to open a number of on-shore blocks, especially in the western region of the country, in the same bidding. There is a court injunction on bidding of the on-shore blocks. The bidding will offer attractive gas price prospects, but it also withdraws zero corporate tax facilities for oil companies--a benefit that was offered in the previous bidding of blocks. The biggest incentive for the third round bidding would be a new gas pricing formula where Bangladesh is ready to pay higher for gas to be produced from the deep waters of the Bay. The previous PSC models spelled out maximum three gas price structures. The new PSC adds a fourth price structure. The Bay of Bengal holds enormous prospects of oil and gas discovery. In the last two years, India discovered at least 100 trillion cubic feet (tcf) of gas--mostly in the Bay close to Bangladesh waters. Myanmar recently discovered seven tcf gas in the Bay close to Bangladesh boundary. [Source: The Daily Star]