United News of Bangladesh

Bangladesh has launched an international bidding round for offshore oil and gas exploration in 27 blocks in the Bay of Bengal, offering a series of incentives, including gas export opportunities, tax benefits and duty exemptions, in a renewed effort to attract foreign investment and strengthen the country’s energy security. State-owned Petrobangla on Sunday invited international tenders for exploration in 12 shallow-sea blocks and 15 deep-sea blocks under the Offshore Bidding Round 2026. The move comes as Bangladesh continues to grapple with mounting energy shortages and growing dependence on imported fuel despite resolving maritime boundary disputes with neighbouring countries more than a decade ago. According to Petrobangla, interested international oil companies (IOCs) have been asked to submit bids by 1:00 pm on November 30. Under the proposed production sharing contract (PSC), foreign companies will be allowed to export gas if Petrobangla or local buyers decline to purchase it. However, Petrobangla will enjoy the first right of refusal. Companies will also be allowed to sell gas domestically to entities other than Petrobangla if needed. Gas pricing has been linked to international crude oil prices, with floor and ceiling limits fixed to reduce market volatility. For deep-sea blocks, gas prices will be set at 11 percent of the prevailing international oil price, subject to a maximum of $11 per MMBtu and a minimum of $7.5 per MMBtu. This means if crude oil trades at $100 per barrel internationally, the gas price would stand at $11 per MMBtu. Even if oil prices rise further, the gas price ceiling will remain capped at $11. For shallow-sea blocks, the maximum gas price has been fixed at $10.5 per MMBtu. To make the investment climate more attractive, Petrobangla will bear the income tax liabilities of expatriate employees working under the contracts. Imported equipment and materials required for exploration, development and production activities will also enjoy full customs duty exemptions. The draft contract stipulates a nine-year exploration period. During the first four years, companies must complete geological surveys and either two-dimensional or three-dimensional seismic surveys. Two years will then be allocated for drilling exploration wells, followed by three years to move into production. Petrobangla said geological surveys will be mandatory for all contracted companies. Selected firms will also be required to provide substantial bank guarantees at different stages of the project. A company must deposit $3 million before starting surveys, followed by $20 million before drilling wells and another $20 million before commencing commercial production if oil or gas is discovered. Under the cost recovery mechanism, foreign companies will recover their investments from the sale of oil or gas. However, annual recovery cannot exceed 75 percent of total costs. The remaining profit oil or gas will be shared between Petrobangla and the contractors. In shallow waters, Petrobangla’s share will range from 40 percent to 65 percent, while in deep-sea areas the share will range between 35 percent and 60 percent. The government has also relaxed labour welfare obligations for investors. Instead of contributing the standard 5 percent of profits to the workers’ welfare fund as required under Bangladesh’s labour laws, the offshore investors will pay only 1.5 percent. Investors will have to bear the cost of building pipelines needed to transport oil or gas from offshore fields. Pipeline costs will depend on distance, water depth and the size of discovered reserves. State-owned exploration company BAPEX will receive a mandatory 10 percent stake in shallow-sea blocks, though it will not hold any share in deep-sea projects. Under the proposed arrangement, gas field contracts will initially remain valid for 25 years, while oil field contracts will run for 20 years, with provisions to extend both by another 10 years. Petrobangla expects offshore exploration activities to begin by the end of 2027 after completing the tendering and contractual processes. An earlier offshore bidding round was launched during the interim government period, but although several companies purchased tender documents, none eventually submitted bids.    

Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood on Sunday said the government would ensure that national interests remain protected in all agreements signed under the Offshore Bidding Round 2026 process. “The BNP has always upheld nationalism as its core principle and we are proceeding with this bidding round keeping that spirit in mind so that Bangladesh does not suffer any loss or compromise its interests,” he said. The Minister made remarks while addressing a press briefing at his Ministry on the occasion of the launching of its long-awaited Offshore Bidding Round 2026, aiming to attract international oil companies (IOCs) to explore untapped oil and gas reserves in the Bay of Bengal as the country seeks to strengthen energy security and reduce dependence on imported fuel. He said the government would carefully analyse international production-sharing contracts before finalising any deals with foreign companies. Describing the launch as the beginning of “a new chapter”, he said Bangladesh had for years relied heavily on imported energy while leaving its own resources unexplored beneath the seabed. “As a result, the country suffered significantly and our foreign currency reserves came under immense pressure,” he said. Referring to the last offshore bidding round held in 1993 during the government of former Prime Minister Khaleda Zia, he said gas currently supplied from some offshore fields originated from contracts awarded during that period particularly involving US energy giant Chevron. “After that, no meaningful offshore bidding round involving foreign companies was held,” he said. The Minister said that although Bangladesh celebrated its maritime boundary victories in the Bay of Bengal over the past decade, sufficident attention was not given to actual exploration and extraction activities. “Many spoke about the victory at sea but perhaps forgot that resources also need to be extracted,” he said. He claimed neighbouring countries that had disputed maritime areas with Bangladesh are already extracting gas from their offshore blocks and exporting energy, while Bangladesh still lacks adequate knowledge about resources beneath its own seabed. The government, he said, pledged to strengthen state-owned exploration company BAPEX, but acknowledged that the company currently lacks the expertise and equipment required for deep-sea exploration. “We have encouraged BAPEX to participate in the bidding process through joint ventures with foreign companies, and we have kept BAPEX involved in the process,” he said. The minister noted that the government moved ahead with the bidding round within 180 days of assuming office, fulfilling one of its election commitments.  “If gas or oil can be extracted from our offshore areas in future, it will become a major driver of the country’s development,” he said. Highlighting the importance of energy security, he said no country could sustain economic development without ensuring adequate energy supplies. “When we assumed office, we found the energy sector in a very poor state. Since then, we have been trying to establish long-term energy security, and the situation is now much better than before,” he said. On possible reserve overlaps or disputes in offshore areas, he said such issues would be resolved through bilateral negotiations if necessary. The minister said several major international companies have already expressed interest in participating in the bidding round, including firms from the United States and China. “Many companies have spoken to me directly and expressed their interest. I hope this time the mistakes of the past will not be repeated and investors will participate actively in the bidding,” Iqbal Hassan  said. Responding to a question on labour-related provisions in the bidding framework, particularly the issue of strike clauses and compliance standards, he said Bangladesh has signed around 70 international labour protocols and is therefore obliged to comply with them. “Bangladesh has signed one of the highest numbers of international labour protocols in the world, so we must follow those commitments,” he said. Speaking at the event, State Minister for Power, Energy and Mineral Resources Aninda Islam Amit said the move was in line with the ruling BNP-led government’s election manifesto, which pledged to achieve greater self-sufficiency in the energy sector through exploration of offshore and onshore resources.  He said the government had revised several provisions in the tender documents to address past limitations and make the bidding process more attractive to international companies while safeguarding Bangladesh’s national interests. “We will do everything while protecting Bangladesh’s interests,” he said, seeking cooperation from the media in promoting the initiative internationally. Power and Energy Secretary Mohammad Saiful Islam said the government had undertaken extensive consultations with international oil companies after the previous offshore bidding round failed to attract any bids despite participation from seven firms in discussions. He said a review committee was formed to identify the reasons behind the lack of participation. The secretary said the government spent more than a year consulting international experts, major global energy firms including ExxonMobil, and local petroleum specialists to revise the production sharing contract (PSC) framework.  

Petrobangla, the oil, gas and mineral corporation, has floated the offshore bidding, inviting international oil and gas companies to explore in the Bangladesh maritime area in the Bay of Bengal The tender, named “Oil and Natural Gas Exploration Under Bangladesh Offshore Bidding Round 2024”, was published in local newspapers and websites of concerned government entities including Bangladeshi missions abroad on Sunday giving six months time until September 9, 2024 for submission of the bids. As per the floated tender, a total of 24 offshore blocks — of which nine are shallow blocks — and 15 deep sea blocks are available for the bidding round.  The nine shallow sea blocks are SS-01, 02, 03, 05, 06, 07, 08, 10 and 11) and 15 deep sea blocks are DS-08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22. The bidder, singly or in association with other companies, can bid for one or more blocks.  Contracts will be signed with the successful bidders in line with the Bangladesh Offshore Model Production Sharing Contract 2023, said the tender.  Read more Cabinet body approves draft contract to invite int’l bidding for offshore gas exploration The features of the proposed contract include full repatriation of profit, no signature bonus or royalty, uncapped attractive gas price linked with international marker, oil price to be determined on the basis of the fair market value prevailing in South and Southeast Asia. It entails no duty for equipment and machinery imported for petroleum operations while contractor's corporate income tax liability will be borne by Petrobangla, and bank guarantee for performance of the minimum exploration program. There will be provision for assignment of interest and share-transfer and 100 percent cost recovery with a yearly cap of 75 percent.  The contractor must have a mandatory work program consisting of 2D seismic survey and mandatory purchase of available 2D multi-client seismic data against bidded blocks to get relief from mandatory work obligations proportionately. They will have minimum work obligation in each of the exploration periods while biddable work program commitment over and above the mandatory program. There will be petroleum profit sharing on the basis of R-factor with biddable upper and lower limits and option to sell contractor's share of natural gas in the domestic market to a third party, at a negotiated price, subject to Petrobangla's right of first refusal. Read more: New PSC: Petrobangla awaits final nods to invite int’l bidding for offshore blocks The bidder must ensure carried stake of 10 percent for state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) for both shallow and deep sea blocks.  The bidders’ qualification criteria include — individual or in case of joint venture at least one member — offshore daily production of at least 15,000 barrel of oil or 150 mmsc of gas. Bidders must have at least one global experience (other than home country) in the oil and gas exploration and production. The Information Package will be available at a cost of US$ 300 or equivalent Bangladeshi taka to the interested bidders/companies. To enable companies to assess the geological prospects of the blocks on offer, Promotional and Data Packages are available on payment basis. Promotional Packages contain Bidding Document, sample seismic sections, gravity, magnetic, geological maps. Companies are required to purchase the Promotional Package in order to qualify for bidding, said the tender.  The purchase price of the Promotional Package is US$ 10,000 or equivalent Bangladeshi taka. Purchase of Data Sales Package is optional. Several Data Sales Packages are available at different prices.  Companies interested in bidding and purchase of Promotional and Data Sales Packages may contact the Director, Production Sharing Contract, Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) Petrocentre, 3 Karan Bazar, Dhaka-1215, said the bidding tender.  Read more: Action against officials of Petrobangla companies if fail to achieve target: Nasrul