Govt to buy gas from IOCs at Asian rate
The government will buy gas from international oil companies (IOCs) at the Asian market rate from now, in a departure from its previous stance to purchase it at only fixed rates.
The decision was taken yesterday at the meeting of the cabinet committee on economic affairs chaired by Finance Minister AHM Mustafa Kamal.
The meeting approved the drafts of both onshore and offshore production sharing contracts.
The purchase price from onshore IOCs will be about $6.5 per thousand cubic feet and from offshore IOCs about $7.25.
“But this is an indicative price. The actual price will be what is prevailing in the Asian market when we go out to purchase,” Kamal told reporters after the meeting at the secretariat.
Under the existing model, the government purchases gas at $2.9 per cubic feet from onshore IOCs.
There is no rate for offshore IOCs, but in the PSC model used in 2014 the price for offshore IOCs was: $5 for shallow water and $6.5 for deep sea, according to energy ministry officials.
“There were shortcomings in the previous PSC models -- there was no distinction between offshore and onshore. Now, we have separated the two. We have kept the price for onshore less than offshore as the cost for the latter is more,” Kamal said.
Because of the shortcomings in the model, the government found no IOCs interested in offshore when it placed tenders, according to Kamal. “We will soon float tenders to award offshore blocks,” he added.
Also at the meeting the committee approved the construction of Bay Terminal at Chattogram Port, which will be implemented under a public-private partnership.
PSA Singapore, a Singapore-based company, will invest $2.5 billion to implement the project, Kamal said.
