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Petrobangla may seek CHT Council’s approval for hilly oil, gas exploration

The state-owned Petrobangla may seek permission from the Chittagong Hill Tracts Regional Council (CHTRC) to carry out oil and gas exploration in the hilly areas.

The issue was discussed at a recent review meeting on the onshore and offshore bidding round, chaired by Energy and Mineral Resources Division (EMRD) Secretary Mohammad Saiful Islam. Petrobangla Chairman Rezwanur Rahman and other senior officials attended the meeting.

“We are planning to seek approval from the Chittagong Hill Tracts Regional Council (CHTRC) for oil and gas exploration in the hilly areas to ensure smooth exploration activities in potential sites,” an official who attended the meeting told Just Energy News.

According to the official, Petrobangla has proposed setting a ceiling price of $100 per barrel and a floor price of $70 per barrel for gas pricing.

Official documents show that the new model links gas prices to Brent crude oil, moving away from the outdated high-sulphur fuel oil (HSFO)-based structure.

Under the proposed framework, gas from deep-sea blocks will be priced at 11% of Brent’s three-month average, with a $70–$100 per barrel floor and ceiling. Shallow-sea blocks will receive 10.5%, while onshore exploration will fetch 8% on plain land and 8.5% in hilly areas.

The meeting also directed state-owned Bapex to identify additional onshore blocks if necessary. Chevron Bangladesh has reportedly shown interest in acquiring some of Bapex’s existing blocks.

Petrobangla has finalized the Offshore Model Production Sharing Contract (MPSC) 2025, introducing major reforms in gas pricing, pipeline cost recovery, and work obligations to attract international oil companies (IOCs). The draft has been submitted to the EMRD for approval.

The 2025 model represents a significant shift from the 2023 MPSC, which offered a flat 10% of Brent (capped at $100) but failed to attract investors — only seven bid documents were purchased, and none were submitted amid political uncertainty. Previously, ceiling prices were fixed at $5.6 per MMBtu for shallow-sea gas and $7.26 per MMBtu for deep-sea gas.

The revisions were made following recommendations from global consultancy Wood Mackenzie in 2022, aiming to align Bangladesh’s terms with international benchmarks.

The updated draft retains full cost recovery for pipelines and facilities, with tariffs to be set under Petroleum Sales Agreements (PSAs). To expedite exploration, it introduces stricter minimum work obligations, requiring contractors to undertake extensive 2D and 3D seismic surveys shortly after contracts are signed.

Another major update replaces the LIBOR benchmark with the SOFR (Secured Overnight Financing Rate) for payment terms.

The government also plans to make fiscal terms more attractive and introduce subsea pipeline tariff also as a cost recovery procedures.

“We are reviewing the fiscal terms and conditions for inviting bids for both onshore and offshore exploration—especially fine-tuning the drafts,” EMRD Secretary Mohammad Saiful Islam told Just Energy News on Wednesday. Another official said the EMRD would submit the revised proposal to the higher authorities for final approval soon.

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