Higher gas price benchmark introduced

Under PSC-2019, gas prices were fixed at USD 7.25 per thousand cubic feet for deep sea blocks and USD 5.50 for shallow waters. In PSC-2023, the system shifted to a floating model, pegging gas prices at 10 per cent of Brent crude oil prices.

The new PSC-2026 raises this benchmark to 11 per cent for deep sea blocks and 10.5 per cent for shallow waters. This means gas prices will move in line with global oil prices. For instance, if crude oil reaches USD 100 per barrel, gas from deep sea blocks would be priced at around USD 11.

To prevent extreme fluctuations, upper and lower price limits based on Brent crude will also be introduced for five-year periods.

The revised contract also allows contractors to build pipelines and recover costs through a tariff system linked to reserves, supply and infrastructure expenses — a provision absent in earlier PSCs.

Profit-sharing arrangements between Petrobangla and international contractors have also been adjusted. If exploration fails but a contractor continues operations, its profit share may increase by 1–2 per cent.

Separately, the interim government earlier reduced the contribution of foreign energy companies to the workers’ welfare fund from 5 per cent to 1.5 per cent, a move seen as another step to improve investor incentives.

Existing tax exemptions on imports will remain in place. Petrobangla will continue to bear income tax on behalf of contractors. Companies will also be allowed to sell gas to third parties domestically if Petrobangla does not purchase it, and export it if local demand is insufficient. Disputes will be subject to international arbitration.

State-owned Bangladesh Petroleum Exploration Production (BAPEX) will retain a 10 per cent stake in shallow sea blocks.