Economic evaluation of production sharing contract of Bangladesh

Abstract

Exploration, development and production of natural gas in Bangladesh are of great importancc and playa vital role in our economy. In Bangladesh. exploration activities commenecd from thc bcgiJUling of the nineteenlh cenlllTY.Aftcr scveral phases of exploration work by governmenl organintions and intcrnational oil companies, an overall good ~uccess ratio in drilling has been achieved. De~pite our geologically prospective areas, exploration and development of gas/oil reserves ha, heen limited due to technical and financial constraints. As a resLlll, inlernational oil companies were invited to accelerate our explonllion and development activities and hence 10meet gas demand of our country. In the Production Sharing Contract. cosl recovery and profit oil/gas share betwecn contractor (JOC) and Pdrobangla are describcd on the basis of daily production A detail cash flow analysis before and after cost recovery period under various prouudlOn sehcmcs, reserve estimales, gas prices and maximum allowabk production is vcry important regarding operational options of Pctrobangla. In this respecl, a thoroLlgh economic analysis is e%ential for future decision making. This report reviews Ihe model production ~haring contract and trics to show the sen8itivity of PSC for differenl parameters, such as initial investment, recoverable rcscrve, yearly recovery, price of gas, operational and overhead cost etc, A detail analysis is performed to examine the Petrobangla cash requiremenl, sLlbsidy 10 local market as ~ornpared to IDe gas price under different scenarios,