bangladesh oil, gas & mineral corporation (petrobangla)
TRANSCRIPT
1
An Introduction to the Gas Sector &
Production Sharing Contract
Bangladesh Oil, Gas & Mineral Corporation (Petrobangla)
April 30,2008
2
Emergence of Petrobangla
Bangladesh Mineral Oil & Gas Corporation (BMOGC) was created through PO #27 on March 26, 1972.
Minerals operation segregated & vested to BMEDC, through PO #120 on Sept. 27, 1972.
Reconstituted Bangladesh Oil & Gas Corporation (BOGC) was short named Petrobangla through the Ordinance #15, on August 22, 1974.
Importation, Refining & Marketing of crude & petroleum products vested with BPC through Ordinance #88, on November 13, 1976.
BOGC & BMEDC merged to form Bangladesh Oil, Gas & Mineral Corporation (BOGMC), by the Ordinance #21 of April 11, 1985.
Partial modification of the Ordinance by the Law 11 of February 1989, the corp. was short named Petrobangla & given the authority to hold the shares of the companies dealing in oil, gas & minerals exploration and development.
3
Petrobangla’s Vision
To Provide Energy for the Sustainable Economic Growth and Maintain Energy Security of the Country. To Provide Energy to All Socio - Economic Groups in All the Areas of the Country.To Diversify Usage of Indigenous Energy.To Contribute Towards Protection of Environment of the Country
4
Petrobangla’s MissionTo Expedite Exploration and Exploitation of Oil, Gas, Coal, and Mineral Resources
To ensure conservation of energy through judicious use
To Carry Research and Development in the Field of Exploration and Exploitation of Energy and Mineral Resources
To Promote CNG and LPG for Protection of Environment
To Encourage Foreign and Private Investment in Oil, Gas and Mineral Sector
Institutional Capacity Building for Achieving the Goals and Objectives
5
Sylhet Gas Fields Ltd.
Bangladesh Petroleum Expl. &
Prod. Co. Ltd.
Bangladesh Gas Fields Co. Ltd.
Barapukuria Coal Mining Co.
Ltd.
Rupantarita Prakritic Gas
Co. Ltd.
Titas Gas T & D Co. Ltd.
Gas Trans. Co. Ltd.
Pashchimanchal Gas Co. Ltd.
Jalalabad Gas T & D System Ltd.
Bakhrabad Gas Sys. Ltd.
MaddhyaparaGranite Mining
Co. Ltd
Energy & Mineral Resources Division
PETROBANGLA
Production MiningCNG & LPGDistributionExploration &
Production Transmission
6
GAS MANAGEMENTGAS MANAGEMENT
PGCL
CONSUMER
JGTDSL TGTDCL BGSL
CONSUMER CONSUMER CONSUMER
SGFL BAPEX TULLOW CAIRNCHEVRONNIKOBGFCL
GTCL
7
P GCL3 %
J GTDS L4 %
BGS L18 %
TGTDCL7 5 %
Distrib
ution
Tea CNG Domestic Total1.531 35.846 154.313 1401.9
0% 3% 11% 100%
Power43%
Fertiliser16%
Captive12%
Industry14%
Domestic11%Comm
1%
TeaN egl
CNG3%
Avg. Consumption
Tullow4%
Niko0%
Cairn5%
SGFL11%
BAPEX3%
Chevron35%
BGFCL42%
Pro
du
ctio
nTGTDCL
22%
JGTDSL3%
BGSL5%
GTCL70%
Tran
smission
GasSupply Chain
8
Fieldwise Production Capacity
45012Bibiyana
1838
70
5
100
230
70
17
11
18
53
97
7
0
35
246
34
405
Capacity (MMSCFD)
IOCs915 MMSCFD
Petrobangla Companies923 MMSCFD
Total
79Total:
2Bangura
3Feni
4Moulavibazar
4Jalalabad
6Sangu
1Fenchuganj
2Saldanadi
2Beanibazar
5Rashidpur
6Kailastila
2Sylhet
1Meghna
2Narsingdi
9Habiganj
4Bakhrabad
14Titas
Producing WellsGas Fields
9
Gas Production and Consumption Data – April 23, 2008
1368Comp-total
TGTDCL
3535Narsingdi
69Power147230Jallabad
AmountSectorGas Mkt. Company
Available Production
Production CapacityFields
1812Total17921838Total
860Non-bulk
186Fertilizer886915S-Total (IOCs)
766Power
Overall
6970Bangura
79Comp-total55Feni
10Non-bulk528450Bibiyana
0Fertilizer76100MoulavibazarPGCL
89Comp-total6160Sangu
35Non-bulk906923S-Total (PB)
10Fertilizer1917Fenchuganj
44Power
JGTDSL
1211Salda
276Comp-total5353Rashidpur
135Non-bulk9697Kailashtilla
65FertilizerBGSL67Sylhet
77Power00Meghna
681Non-bulk245246Habiganj
111Fertilizer3334Bakhrabad
576Power397405Titas
Unit: mmscfd
10
Gas Reserve Vs Production (As of December 2007)
21.265
7.6918
5.4711
7.98
7.42
15.4035
0 5 10 15 20 25
PossibleRecoverable
ProbableRecoverable
Proven Remaining
Production
Proven Recoverable
Proven
Gas in TCF
(GIIP)
11
Sector wise Daily Demand Forecast(GSMP-2006 : Base case)
3818161827819212019-203509152727817042018-193240144227815192017-183030136427813882016-172853128727812882015-16 2669121527811772014-152518114427810972013-14234010762789862012-13215810082788722011-1220229322788122010-1118968442787742009-1017257642726882008-0916196892726582007-08TotalNon-BulkFertilizerPowerFY
(MMSCF)
12
Company wise Daily Demand Forecast(GSMP-2006 : Base case)
303017410414962419792016-17
381825418516880224092019-20350924311015577222292018-19324017810715169821062017-18
285312911615256018952015-16 266911510818054417232014-15251813011611753816172013-14234013211511646415132012-13215812010911545113652011-1220221289710641612742010-11189680849734612892009-10172574838831211682008-0916191848829411522007-08TotalS&SWPGCLJGTDSLBGSLTGTDCLFY
(MMSCF)
13
3823148837519602016-17
4567177537524172019-204303167337522552018-194045157737520932017-18
3600140337518222015-16 3435136037517002014-153224126137515882013-143021117137514752012-132847108832514342011-122620101132512842010-11237089028911912009-1020188432898862008-0919008012898102007-08
Total OthersFertilizerPower FY
(MMSCF)
Sector wise Daily Demand Forecast(By Petrobangla-2007)
14
Company wise Daily Demand Forecast(By Petrobangla-2007)
456755542680827782019-20430355034478826212018-19404554531674424402017-18382354129070222902016-17360053826366021392015-16 343548023765620622014-15322442123563619322013-14302141623456318082012-13284736323349117602011-12262024923247516642010-11237021013746315602009-1020189412741313842008-0919007612236213402007-08Total PGCL+ S&SWJGTDSLBGSLTGTDCLFY
(MMSCF)
15
Projected Daily Gas Production by Petrobangla(MMSCF)
179818752014198519651943188817251595142712401042991Total
1331381842052402382582702401961416249BAPEX
660660660610550530475370300300223199202SGFL
100510771170117011751175115510851055931876781740BGFCL
2019-20
2018-19
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
COMPANY
16
Projected Daily Gas Production—IOCs(MMSCF)
2019-20
2018-19
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08Company
IOC-1 (Existing Fields)
10012012012513013514014515055606570Cairn
00001515202530304566Niko
1070109011101155119512401270132013601310128010761061Sub-Total
10010010010010010010010010010010010080Tullow
IOC-2 (Expected from Contracted Blocks)
87087089093095099010101050108011251075905905Chevron
500500500500300000000Sub-Total
1970199020102055189516401670167014601310128010761061Gr. Total
IOC-3 (Expected from 3rd Round Bidding)4004004004004004004003501000000Sub-Total
IOC -1 + IOC – 2 + IOC - 3
Total EP
Cairn
Chevron
1001001001001001001005000000
10010010010010010010010000000
2002002002002002002002001000000
17
Projected Demand - Supply Balance(MMSCFD)
2868296531243140316031833158304529552737252021182052Production (PB + IOC-1)
4502433042504126401837963587345831422749238322612006Demand
2019-20
2018-19
2017-18
2016-17
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08Events
Balance -1634-1365-1126-986-858-613-429-413-187-12137-14346
Reserve basis: P1 + P2 of Existing fields + Sundalpur + Bibiyana Expansion + Magnama.
18
Current Reserve Categories –Supply Demand Balance
0
1000
2000
3000
4000
5000
6000
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
Gas
mm
cfd
Proved Probable Possible Case B Demand
Shortfall would commence in 2011 against Proved ReservesShortfall would commence in 2011 against Proved Reserves
Ref: GSMP 2006
19
Gas Infrastructure
Nalka
Khulna
Rajshahi
West Zone Proposed Gas
Pipeline540km
Compressor Stations
Muchai
Ashuganj(West)
Ashuganj(South)
Elenga
Existing
Total Capacity : 2,000 MMCFD
Total Length : 1,900 Kilometer
Future Expansion:
Capacity : 1,000 MMCFD
Length : 850 Kilometer
Size: 12 inch to 30 inch pipeline is planned to construct by 2011 to cover Rajshahi and Khulna regions.
In addition 4 compressor stations will be installed at Muchai, Ashuganj (south), Ashuganj (west) and Elenga by 2011 to boost up pipeline pressure.
Gas Pipeline Network
20
Major Transmission Pipelines
425
200
350
250
200
270
200
500
500
350
Capacity(mmcf)
2006/200710002060Dhanua-Aminbazar
200610003037Ashuganj-Monohordi
2005
1982
1985
1999
1992
2001
2002/2004
1998
1993
CommissionedIn the year
96024175Bakhrabad-Chittagong
1000[30,20][6+54]=60
Nalka-Bogra
10002068Bakhrabad-Demra
1000[24,30,24,20][14+9+16+35]=
74Elenga-Baghabari
100024124Ashuganj-Elenga
11352018Beanibazar-Kailashtila
113530,14[75+82]=157Rashidpur-Ashuganj
10003058Ashuganj-Bakhrabad
113524175North-South
Maximum Allowable Operating Pressure
NominalDiameter(Inches)
Length(Km)Pipelines
21
Transmission Projects under Implementation
30”x235kmADBDec 2011Ashuganj-BKB-CTG Trans. Pipeline(under active consideration of ADB)
30”x60kmWBJune 2010Bakhrabad – Siddirganj 24”x14kmADB/GOBJune 2010Pipeline from Titas field to A-B pipeline20”x165kmADBJune 2011Bheramara-Khulna Pipeline
SizeFunded ByCompletion TimeProjects
12”x51kmADBJune 2009Bonpara-Rajshahi Pipeline
30”x87kmADBJune 2010Hatikamrul-Ishwardi-Bheramara Pipeline10000 hpADBJune 2011Elenga Compressor
Expansion to West Zone
BB Corridor Expansion30”x51kmADBJune 2009Monohordi-JMB East Loopline
18000 hpADBDec 2011• Ashuganj Compressor Station12000 hpADBDec 2011• Muchai Compressor Station
North-South System Expansion
22
130June-Dec. ‘08
BanguraTullow
115May-June ‘08
Fenchuganj #2
BAPEX
1
Dev. Well
3
2
Workover
65Total
20Oct.-Dec. ’08BKB # 2, 5BGFCL
Production (MMSCFD)
PeriodWellCompany
Production Augmentation ActivitiesProduction Augmentation Activities(2007(2007--08 to 200808 to 2008--09)09)
23
110July-Sept. ‘09BKB#9BGFCL120May-Aug ‘09Shahbajpur BAPEX
130Feb.-Jun ‘11SrikailBAPEX
115Aug-Nov ‘09Meghna#1BGFCL
130Jan-June ‘10SundalpurBAPEX
120Feb.-July ‘10SemutungBAPEX130Sept.-Oct. ‘10BegumganjBAPEX
125May-Aug ‘10Titas # 18BGFCL125Jun-Oct ‘10Kaillastila # 7SGFL125Sep-Dec ‘10Habiganj # 12BGFCL
5
Dev. Well
6255Total
125Jan-Mar ‘10Titas # 17BGFCL
Production MMSCFD
Appraisal Well/Workover
PeriodWellCompany
Production Augmentation ActivitiesProduction Augmentation Activities(2009(2009--10 to 201010 to 2010--11)11)
24
Cairn
Total EP & JV
Cairn-Chevron
Company
200Nov ’08 –June ‘12
Exploration in Block # 5,7,10
100Nov ’08 –June ‘12
Exploration Drilling of Magnama & Hatiya Structure
300 - 5002009-2016Bangladesh Offshore Bidding Round 2008
50 - 100Nov ’08 –June ‘12
Exploration in Block # 17 & 18 (3-D Seismic followed by exploration drilling)
Production MMSCFDPeriodPrograms
Production Augmentation Activities Production Augmentation Activities (Long term) (Long term)
25
PSC ACTIVITIES-SOME DEFINITIONS
ConcessionA license, lease, or other permit for exploration and/or production in an area or block. It usually denotes a government lease.
26
PSC ACTIVITIES-SOME DEFINITIONSJoint Operating Agreement(JOA)
The document governing operations in a Joint Venture of prime importance to all participants as under it they secure or may lose, rights to production etc.A typical Joint Operating Agreement will include sections to cover most or all of the following topics:
-Scope, Duration, Legal Status -Interest rights and duties of the Operator and other participants-Management Structure and voting procedure-Approval of Operating Programmes and Budgets-Cash contributions, costs and accounting-Control and custody of joint properties and equipment-Sole Risk,Default,Withdrawal,Assignment etc-Disposal of Petroleum-Confidentiality,-Force Majeure,Litigation etc.
27
PSC ACTIVITIES-SOME DEFINITIONS
Joint Venture: A common form of risk-sharing in Oil and Gas operations, especially exploration and production. Although they may have many of the characteristics of partnerships and are often referred to as such, they are usually legally constituted specifically to avoid partnership implications.
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PSC ACTIVITIES-SOME DEFINITIONS
Production Sharing Contract:A contract between a host government and petroleum company for the exploration and production of petroleum resources where the company's costs are recovered from a percentage share of production and the balance is shared between the government and the company.
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On Contracts
• These slides are taken from the Training materials of IHRDC,Boston,MA,USA
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Exploration of Hydrocarbon in Bangladesh
Bangladesh is one of the Largest Deltas.Surface Area is Mostly Covered by Alluvial and Delta Plains, but has some Hill Areas in the Northeast and Southeastern Part.Hydrocarbon Exploration Activities Started in Bangladesh Territory Since 1908.�First Discovery of Gas in Sylhet in 1955 �Enactment of Bangladesh Petroleum Act 1974 Promoted New Investment Under Production Sharing Contract�First Oil Discovery in 1986 at Sylhet-7 Well
48
Exploration of Hydrocarbon in Bangladesh
• Phase-I (1910- 1933)• In the early days of exploration, drilling was
targeted near oil/gas seeps in the fold belt. In this phase six exploration wells were drilled by Exploration and Production companies without any discovery. Individual well depth varied from 763 meters to 1,047 meters. The Second World War disrupted the exploration activities until the middle of the last century.
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Exploration of Hydrocarbon in Bangladesh
• Phase-II (1951- 1971)• During the second phase, early forms of modern geophysical
methods were used in exploration. During the 50’s and 60’s the onshore area was explored by major International Oil Companies, e.g. Shell, Stanvac, Pakistan Petroleum Limited (PPL, a subsidiary of Burma Oil Company) and the national Oil & Gas Development Corporation (OGDC). Gravity and Surface Magnetic reconnaissance surveys were conducted followed by single fold seismic studies supplemented by geological information from wells and outcrops in the surrounding areas. The operators of the second phase drilled 22 exploratory wells, thereof one offshore, and discovered eight gas fields, all in onshore area
50
Exploration of Hydrocarbon in Bangladesh• Phase-III (1972- 2007)• After the emergence of Bangladesh, the Bangladesh Petroleum Act. 1974
was promulgated following which Petrobangla was formed in 1974 to promote and regulate exploration, production and distribution ofpetroleum. The years 1974-78 were focused on offshore drilling by six International Oil Companies under Production Sharing Contracts (PSC).
• The 80,s exploration was targeted on liquid hydrocarbon; Bangladesh entered into the oil-era in December 1986, when oil was discovered in Sylhet -7 well. Oil was also tested at Fenchuganj-2 and Kailashtila-2. Model PSCs of 70's and 80's were based only on oil prospects.
• During the period 1972-2008, 173 wells including 26 offshore wells were drilled by the national organization Petrobangla and foreign oil companies. Petrobangla discovered 10 gas fields including oil discovery in two gas fields below the producing gas sands and the foreign companies discovered five gas fields of which two are in the offshore area.
51
Production Sharing Contract Activities• During 1989 Bangladesh was
divided into 23 acreage Blocks (6 offshore + 17 onshore blocks)
• 8 PSCs active in 10 BlocksIOC Block (s) NosCairn, UK 16, 5 & 10 3Chevron, USA 12,13 & 14, 7 3Tullow, Ireland 9 1Tullow, Ireland 17 & 18 1
• BAPEX working in 2 Blocks (Blocks 8 and 11)
• 11 Blocks are open
52
PSC Activities: Cairn Energy• Operation: In Block# 16, 10 & 5• Discovery: Offshore Sangu gas field • Production: 70 MMCFD from Sangu gas
field• Present partnership of Sangu Gas Field:
Santos-37.5%,Cairn-37.5%, Halliburton & Roots-25%.
• Submitted appraisal program for further activities like 3D Seismic & drilling wells at Maghnama and Hatia structures
• Development partner: Bapex (10% carried) in Block#10 & 5
• Conducted seismic surveys in Block#10 and Block#5
53
PSC Activities: Chevron• Operation: In Block#12, 13, 14 and 7• Discovery: Maulavibazar gas field in Block#14 and
Bibiyana gas field in Block#12• Production: 230 MMCFD from Jalalabad gas field and
112 MMCFD from Maulavibazar gas field• Bibiyana gas field started production from March 2007 &
presently producing 450 MMCFD ,500 MMCFD by Dec 2008 .
• Block#7: Offered under 2nd Round of Bidding, partner BAPEX (10% carried), conducted seismic survey, identified leads & planning to conduct more survey to confirm the leads.
54
PSC Activities: Tullow-Niko-Bapex• Contract signed : April 11, 2001 under 2nd Bidding
Round in Block# 9• Partnership : Tullow - 30%, Niko - 60%, & Bapex - 10%
(Carried)• Activity: Conducted 2D & 3D seismic surveys and
drilled 3 exploration wells• Discovery: Bangura and Lalmai gas fields• Producing 70 MMCFD from 3 wells under Long-term
Testing.• Expected to increase production upto 100MMCFD by
July 2008.
55
PSC ACTIVITIES: TOTAL E & P►Operation : In Block # 17 & 18
►Discovery: Nil
►Offered under 1st Round of Bidding
►Conducted seismic survey during Initial Exploration Period and drilled 1 well (Reju # 1) during 1st extension of the InitialExploration Period
►An Amendment Agreement has been signed on March, 2007 to extend the Exploration Period upto March 2010.The exploitation program includes:1000 sq. km 3D seismic and drilling of one well.
56
No. of blocks : 23
No. of onshore blocks: 17
No. of offshore blocks : 6
Average size: 11,000 sq. km
Southern boundary of blocks were upto 20 degree North Latitude
During 1st and 2nd bidding rounds total 10 PSCs were signed for 12 blocks
Currently 8 PSCs are active in 10 blocks
Due to large size of the blocks, none of these blocks were fully explored
Review of the acreage block map - 1989
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The Acreage Block Map - 2008
Number of blocks on offer - 28 offshore blocks
The shallow water blocks situated north of 20º N latitude are categorized as Type-A
The deep water blocks situated south of 20ºN latitude are categorized as Type-B.
Type A: Average size 6,000 sq. kmNo. of blocks - 8Max. Water Depth – about 200 m
Type B : Average size 3,300 sq. kmNo. of blocks - 20Max. Water Depth – about 2000m
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Parties
The Government of the People's Republic of Bangladesh and Bangladesh Oil, Gas & Mineral Corporation (Petrobangla)
Contractor(s)
Contract Period
Exploration: 8 (4+2+2) years for Type - A Blocks
9 (5+2+2) years for Type - B Blocks
Appraisal: : Up to a maximum of three years if needed
Production: For each production area 20 years from the approval date of Development Plan for an Oil Field and 25years for a Gas Field. Provision for five years extension subject to Petrobangla’s approval.
SALIENT FEATURES OF THE MODEL PSC 2008
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25% of the contract area at the end of 4th/5th contract year; however in case of seismic only option at the end of 3rd contract year.
Additional 25% at the end of the 6th/7th contract year
All areas not declared as production areas at the end of the 8th/9th contract year
MINIMUM WORK OBLIGATION
Mandatory Work Program: During Initial Exploration Period, the Contractor shall conduct:
2D seismic survey in a given grid covering the entire Contract Area for both Type-A and Type-B blocks .
Drilling of 1 exploration well only for Type – A blocks.
RELINQUISHMENT
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Initial Exploration Period :
Geological Survey, Geophysical Survey, Other Surveys and Drilling of Exploration Wells
1st Extension to Initial Exploration Period:
Geological Survey, Geophysical Survey and Drilling of Exploration Wells.
2nd Extension to Initial Exploration Period:
Geological Survey, Geophysical Survey and Drilling of Exploration Wells.
BIDDABLE MINIMUM WORK PROGRAM
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A Joint Review Committee (JRC) shall be established by Government/Petrobangla and Contractor promptly after the Effective Date.
JRC shall consist of eight (8) members, three (3) of whom shall be designated by Petrobangla, one (1) by Government and four (4) by Contractor.
The Chairman of the JRC shall be designated by Petrobangla from among the members appointed by it.
The JRC shall review and make recommendations,opinion or decision on the proposed Work Program and Budget submitted by Contractor for each Contract Year during Exploration Period.
JOINT REVIEW COMMITTEE
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Bank guarantee against minimum biddable work program must reflect market cost.
Within thirty (30) days of the signature of the Contract, and upon each request for extension of the Exploration Period, Contractorshall provide Petrobangla an irrevocable and unconditional bank guarantee in form and substance.
If the Contractor fails to perform any of its accrued Minimum Exploration Program, then the Contractor or its guarantor shall pay Petrobangla the entire amount of such outstanding guarantee or guarantees for the work.
The companies constituting the Contractor shall procure and deliver to Petrobangla within thirty (30) days from the Effective Date of the Contract financial and performance grantee in favor of Petrobangla from a parent company acceptable to Petrobangla.
BANK GUARANTEE
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Register within one hundred and eighty (180) days of the Effective Date a subsidiary or branch or representative office in accordance with the relevant provisions of Applicable Law
Conduct all Petroleum Operations in a diligent, conscientious and workmanlike manner
Contractor shall maximize the employment of Bangladeshi nationals possessing the requisite qualifications and experience in Petroleum Operations. Contractor shall ensure that the employment of the Bangladeshi nationals be maintained in the following proportion:
Exploration Period: Initial Exploration Period not below 20%.Extended Exploration Period not below 50%
Production Period: 1st five years - not below 60%Next five years - not below 75%Period after ten years - not below 90%
CONTRACTOR'S OBLIGATIONS
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The Contractor shall obtain the following insurance coverage for Petroleum Operations :
Loss or damage to all installations, equipment and other assets
Loss of property or damage or bodily injury suffered by any third party
The cost of cleaning up pollution following an accident
The Contractor’s liability to its employees
Cost of well control and re-drilling expenses
Third party liabilities
Contractor shall furnish to Petrobangla policies / certificates evidencing that such coverage is in effect.
Such insurance policies shall include Petrobangla as additional name insured and shall waive subrogation rights against Government and Petrobangla.
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Contractor shall conduct the following environmental examinations:
Initial Environmental Examination (IEE)
Environmental Impact Assessment (EIA)
Environmental Management Plan (EMP) as per prevailing Environment Conservation Act, 1995 and Environmental Conservation Rules 1997
In case of any damage or expense caused by inefficient, careless or negligent activities of the Contractor:
Contractor will not be allowed to recover the cost for such damage under Cost Recovery
Contractor shall pay due compensation for such damage.
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Within thirty (30) days after the Date of Declaration of the first Commercial Discovery, a Joint Management Committee (JMC) shall be established by Government/Petrobangla and Contractor .
JMC shall consist of eight (8) members, three (3) of whom shall bedesignated by Petrobangla, one (1) by Government and four (4) by Contractor.
The Chairman of the JMC shall be designated by Petrobangla from among the members appointed by it.
JOINT MANAGEMENT COMMITTEE
68
The JMC shall amongst other things deal with the following matters :
All Work Programs, Budgets and other reports and proposals submitted by Contractor to Petrobangla
Progress of Contractor's work
Any problem arising in Petroleum Operations
Appointment of auditors
Loan agreements for Development Plan
Annual personnel plan of the Operator
69
Within sixty (60) days after Petrobangla's approval of a Development Plan, Contractor shall propose a detailed Work Program and Budget for that Production Area for the ensuing Calendar Year. The Joint Management Committee shall act on such proposals.
No Petroleum Operations shall be carried out unless and until the relevant Work Program and Budget has been approved in writing by Petrobangla.
If there is difference in opinion regarding a Budget proposed byContractor and the Parties fail to resolve it, then, notwithstanding the foregoing, the matter shall be referred to the Secretary of the Energy and Mineral Resources Division
WORK PROGRAM AND BUDGET FOR DEVELOPMENT PLAN
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COST RECOVERY
Contractor shall recover all costs and expenses in respect of Exploration, Appraisal and Development related operations
The Cost Recovery limit shall be maximum of fifty-five percent (55%) per Calendar Year of all Available Oil / Natural Gas/ Condensate/ NGL from the Contract Area.
COST RECOVERY AND PROFIT ALLOCATION
71
The Profit Petroleum shall be allocated between Petrobangla and Contractor in the following proportions:
Type – A Block
Oil/Condensate/NGL: Biddable from 55% to 80% on tranches from 12,500 to 100,000 bbl/day or above
Gas: Biddable from 55% to 80% on tranches from 75 to 600 mmscf/day or above
Type – B Block
Oil/Condensate/NGL: Biddable from 50% to 75% on tranches from 12,500 to 100,000 bbl/day or above
Gas: Biddable from 50% to 75% on tranches from 75 to 600 mmscf/day or above
PROFIT SHARING
72
Contractor shall have the right to produce annually a total volume of Gas up to 7.5% of the Proven Recoverable Gas reserves from onshore blocks
In case of offshore blocks a greater percentage may be agreed by Petrobangla and the Contractor
Natural Gas for Export
Contractor shall have the right to export any Marketable Natural Gas produced from the Contract Area in the form of Liquefied Natural Gas ("LNG"), subject to first right of refusal of Petrobangla
Gas Price
Onshore gas: 75% of HSFO with biddable discounts. The price will have a floor of US$70/metric ton and a ceiling of US$180/metric ton of HSFO
Offshore gas (Type – A blocks): 25% higher than the onshore gas price
Offshore gas (Type – B blocks): 100% of the HSFO
Western zone (Onshore): 25% higher than for the other onshore gas price
NATURAL GAS
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Contractor shall have the right to operate the Pipeline until cost recovery is completed. If Petrobangla so desires the Contractor shall continue to operate the Pipeline after the Cost Recovery .
Except Petrobangla, all parties who use the Pipeline downstream of Measurement Point shall pay 1% tariff against their share of Petroleum transmitted through the pipeline for transmission service. Any tariff received will be paid to the account of Petrobangla
However, the Contractor will be exempted from paying tariff during cost recovery of the said pipeline
Title to the Pipeline(s) shall be with Petrobangla
PIPELINES
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For third party sales, the value of petroleum will be realized at arms length
If there have been no sales of Crude Oil to third parties at arm's length, the Value of Oil shall be determined as follows:
on the basis of the FOB selling price per Barrel of a basket of three Crude Oils
On the basis of the spot market for the same Crude Oils
Spot price and FOB selling price will be taken from Platt's Oilgram or Asian Petroleum Price Index (APPI)
VALUATION OF PETROLEUM
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No taxes will be imposed on materials and equipment related to Petroleum Operations brought into Bangladesh by Contractor, its subcontractors or by any agent on permanent or re-exportable basis
Contractor shall be liable to pay including but not limited to the following:
Corporate income tax
Income tax of employees of Contractor
Income tax of sub-contractors
Duties and taxes on locally purchased goods and commercial services
Any levies or exaction in respect of property including leased property, capital, net worth, operations, remittances or transactions
TAXES AND DUTIES
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Duties and VAT on imported office equipment, air conditioners, refrigerators, sedan cars and station wagons, microbuses, household utensils .
Value Added Tax and Supplementary Duty (if any) for goods and services purchased to implement Petroleum Operations as per provisions of the Value Added Tax Act. 1991 and the Value Added Tax Rules, 1991 or as may be amended from time to time.
TAXES AND DUTIES
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The Contractor shall pay the following fees and bonuses:
Discovery bonus : UD$ 3,000,000
Production bonus : US$ 500,000 to US$ 4,000,000 for different production levels
Research and development fees : US cents 3 per Barrel of Contractor's Profit Oil and Profit Condensate and US cents 0.4 per MCF of their profit Natural Gas
Contract service fee : US$200,000/year for Exploration and Development PeriodUS$ 300,000/year for Production Period
FEES AND BONUSES
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Petrobangla shall become the owner of the following:
Any immovable property purchased or acquired by Contractor
Any fixed or movable asset purchased by Contractor outside Bangladesh when it is landed in Bangladesh
Any fixed or movable asset purchased in Bangladesh as soon as it is purchased
All original geological, geophysical, geochemical, drilling, engineering, well logs, production and other data obtained or compiled by Contractor as a result of Petroleum Operations
TITLE TO ASSETS AND DATA
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Contractor shall be required to provide 80% of its pro-rata share Oil, Condensate and NGL at 15% discount to meet internal demand.
Contractor shall not enter into any contract for sale of any part of Petrobangla's Oil from the Contract Area without Petrobangla's prior specific consent.
SUPPLY OF INTERNAL DEMAND AND STATE'S RIGHT OF REQUISITION
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Together with the yearly Work Program and Budget, Contractor shall submit its manpower requirements including its organization chart.
Contractor shall first obtain written approval from Petrobangla for any positions to be filled by expatriate personnel by ensuring that expatriate personnel are employed only to occupy positions for which it has not been possible to obtain Bangladesh personnel. [This clause will not be applicable for the Exploration Period of offshore blocks]
Contractor shall review its expatriate requirements with Petrobangla annually.
Contractor shall consult with Petrobangla for the purpose of employing qualified Bangladesh personnel in the conduct of Petroleum Operations.
EMPLOYMENT, TRAINING AND TECHNOLOGY TRANSFER
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During Petroleum Operations, Contractor shall have the obligation to arrange for the systematic transfer of its technology, know-how and experience to Petrobangla
Contractor shall offer a mutually agreed number of Bangladeshi nationals the opportunity for on-the-job training and practical experience in Petroleum Operations
During the Exploration and Development Period, Contractor shall make a training grant to Petrobangla of US$150,000 per Contract Year
Following the Date of Commencement of Commercial Production, Contractor shall make a training grant to Petrobangla of US$ 200,000per Contract Year
The above training grants shall not be subject to Cost Recovery.
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The Parties shall make their best efforts to settle any disputeamicably through consultation
If any dispute is not settled through consultation, the Parties may, by mutual agreement, refer the dispute for determination by a sole expert to be appointed by agreement between the Parties.
The proceedings before the sole arbitrator or the arbitration tribunal shall be governed by the Bangladesh Arbitration Act 2001.
In pursuance of section 25 of the Arbitration Act 2001, the solearbitrator or the arbitration tribunal shall conduct the arbitration in accordance with the United Nations Commission on International Trade Law Arbitration Rules (“UNCITRAL Rules”).
CONSULTATION, EXPERT DETERMINATION AND ARBITRATION
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Contractor may with prior written approval of Petrobangla assignany or all of its rights, interests and obligations to any of its Affiliates or to a non-Affiliated third Party
The proposed assignee or assignees must produce reasonable evidence of its or their financial and technical competence
In case of any change in the status of any entity comprising theContractor or its share holding resulting in a change in the control of the entity; or its relationship with the company(ies) providing the guarantee; the company shall seek the consent of the Government/Petrobangla for assigning the Participating Interest under the changed circumstances
(“control” means ownership by one company of more than fifty percent (50%) of the voting securities of the other company; or the power to direct, administer and dictate policies of the other company )
ASSIGNMENT
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The assignor shall submit a valuation and all material terms of the assignment.
Any transfer or related taxes, stamp, duty, charges or other fees from any assignment shall be borne by Contractor.
The Government/Petrobangla reserves the right to employ an independent consultant, at the cost of Contractor to be mutually agreed by government/Petrobangla and such entity, to carry out an independent valuation of the assignment transaction.
ASSIGNMENT
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Provision for Unitization between two adjacent blocks where a single geological structure spreads over both the blocks
Provision for international unitization agreement if a single geological structure spreads over international boundaries
UNITIZATION
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During the term of the Contract, Contractor shall be responsible for Abandonment of all Petroleum facilities.
Contractor shall conduct Abandonment Operations in accordance with the approved Abandonment Work Program and Budget
Contractor shall commence payment to Petrobangla into a fund called "Abandonment Fund" on the first anniversary of the FirstCommercial Production
Contractor shall not have to be liable for both payment into theAbandonment Fund and the actual cost for Abandonment of Petroleum facilities carried out by Contractor during the term of this Contract.
Abandonment Fund payments made by Contractor to Petrobangla shall be cost recoverable.
ABANDONMENT
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BID AREA
Number of blocks on offer: 28 offshore blocks
The shallow water blocks situated north of 20º N latitude are categorized as Type-A
The deep water blocks situated south of 20º N latitude are categorized as Type-B.
Size
Average size of Type-A blocks ~6,000 sq.km.
Average size of Type-B blocks ~3,300 sq.km.
Water Depth
Water depth of Type-A blocks: upto 200 meter.Water depth of Type-B blocks: above 200 meter.
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Pre-qualification CriteriaBidder, whether individual or in case of joint venture at least one member must hold an offshore acreage as operator, with an offshore daily production of at least 25,000 BOE to be considered as technically qualified for bidding.
• Evaluation Criteria
• Biddable Work Program: [30 marks]• Seismic Survey • Wells • Other Surveys (Geochemical, Seabed Sampling, Gravity, Magnetic, Sea bed mapping
etc.) • Bank Guarantee
• Fiscal Package: [70 marks]• Percentage of Profit Petroleum Allocation: Biddable from the minimum level for
each tranche as per PSC Article 14.6. The bidder offering higher profit petroleum share indicating better NPV to the government will be more favorably evaluated.
BASIS OF BID EVALUATION
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To be qualified for selection, the bidder, whether individual or in case of joint venture, at least one member must hold an offshore acreage as operator, with an offshore daily production of at least 25,000 BOE to be considered as technically qualified for bidding.
A bid not confirming commitment to the Mandatory Work Program shall be liable to be rejected.
The bidders shall be required to commit at least one exploratorywell in the Initial Exploration Period for the Type - A blocks. Otherwise, such bid shall be liable to be rejected.
A bid would be liable for rejection if it contains any conditions, assumptions and/ or deviations which are inconsistent or not complying with the contract terms.
EVALUATION OF BIDS AND REJECTION CRITERIA
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For a bid to be valid, bidding company or consortiums required to purchase the Promotional Package before the bid closing date.
Government may also take into account the past performance of bidding companies including the track record of the companies orthe consortium in respect of court cases against or any other basis and on this consideration or any other consideration, at the sole discretion of the Government, it may accept or reject any or all bids.
Government at its sole discretion reserves the right to accept or reject any or all of the bids received without assigning any reason, whatsoever.
EVALUATION OF BIDS AND REJECTION CRITERIA
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Information Package: Includes the detailed Notice Inviting Bids, a brochure providing geological and related information, details of the blocks offered, the Model Production Sharing Contract-2008, The National Energy Policy-1995, The Bangladesh Petroleum Act-1974, Promotional Package order form with content and Data Sales Package order form with content and price. The Information Package will be available at a cost of TK. 7000 or US $ 100.
Promotional Package: Includes 28 maps/sections representing geology of the country. Purchase is mandatory to qualify for bidding. Price is US$ 7,500 or BDT 525,000.
Data Packages: Contains seismic sections, gravity, magnetic, geological maps, wire line logs and geochemical data etc. to enable companies to assess the geological prospects of the blocks on offer. Several Data Sales Packages are available at different prices.
AVAILABILITY OF DATA
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Way ForwardSteps to be taken to meet future energy demand:
Exploration Efforts to be Strengthened to Discover More Gas by Petrobangla and IOC
Sole Dependency on Natural Gas has to be Reduced.
Usage of Renewable Energy to be Encouraged and Pursued.
Energy Conservation, Energy Mix Policy
New Power Plants should have Dual Fuel Provision.
Country’s Indigenous Coal Extraction to be Given Priority.
Initiative for Import of LNG or Pipe Gas should be undertaken assoon as possible
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VALUE OF EDUCATION& HUMAN RESOURCES
VALUE OF EDUCATION"If you plan for a year, plant a seed. If for ten years, plant a tree. If for hundred years, teach the people. When you sow a seed once, you will reap a single
harvest. If you teach the people, you will reap a hundred harvests".
K'uan-tzu (591-47 BC)Value of Human Resources
"Human Resource is the means and end of all development"
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