For over one and a half decades, offshore oil and gas exploration has been mired in failure. More than a decade after determining its maritime boundaries, Bangladesh has yet to discover oil or gas in the Bay of Bengal.
Although four foreign companies initially commenced exploration, three withdrew before the contractual deadlines. The sole remaining company has also ceased operations and is exiting without completing its assigned work. As a result, oil and gas exploration at the sea has come to a complete standstill.
According to sources at Bangladesh Oil, Gas and Mineral Corporation (Petrobangla), in the most recent tender for oil and gas exploration in the Bay of Bengal, seven foreign companies initially purchased bid documents. To encourage greater competition, the deadline was extended by three months. However, ultimately, no foreign company submitted a tender. Preparations are now being made to issue a fresh tender.
Petrobangla officials noted that it typically takes one and a half to two years to commence operations following the invitation of tenders and the signing of agreements. Consequently, restarting exploration offshore will be delayed. Furthermore, given the current political situation of the country, tendering may not yield positive outcomes. As such, the process may be postponed until after an elected government assumes office.
Bangladesh resolved its maritime boundary disputes with India in 2012 and with Myanmar in 2014, opening vast new opportunities for offshore exploration. Petrobangla divided the Bay of Bengal into 26 blocks, 15 deep-seas and 11 shallow-seas, for oil and gas exploration.
The previous Awami League government began importing Liquefied Natural Gas (LNG) in 2018. The government appeared more inclined towards imports rather than exploration
Exploration had already begun earlier. Under the Production Sharing Contract (PSC) 2008, US company ConocoPhillips started work in two deep-sea blocks in 2010, conducting two-dimensional surveys. However, when its demand for higher gas prices was not met, it withdrew in 2015.
Under PSC-2012, India’s ONGC Videsh signed agreements in 2014 for two shallow-sea blocks. A joint venture of Australia’s Santos and Singapore’s Kris Energy also signed agreements for two blocks. Santos exited in 2020, citing a withdrawal from the region. In 2016, under the Quick Enhancement of Electricity and Energy Supply (Special Provision) act, South Korea’s Posco Daewoo signed contracts for two offshore blocks without competitive tender. They too left before the contract period ended.
For several years, ONGC was the only company operating offshore. It began work in 2019, drilling one well but finding no gas. Without drilling a second well, it is now leaving after multiple extensions.
According to Petrobangla sources, ONGC had to invest more than initially planned, with drilling costs rising significantly. The company informed Petrobangla that it would not seek further extensions and was preparing to exit. The Energy Division has already approved the decision, and the contract has been terminated as per regulations. ONGC is now in the process of winding up its activities. This marks the complete suspension of offshore oil and gas exploration in Bangladesh.
Petrobangla Chairman Md Rezanur Rahman told Prothom Alo that after ONGC informed of its decision to discontinue operations, measures were taken following consultation with the Energy Division. Furthermore, the opinions of foreign companies were sought before initiating fresh tenders for gas exploration. A revised draft of the Production Sharing Contract (PSC) is now being prepared, with necessary amendments made to safeguard national interests.
Industry insiders noted that to address the gas crisis, the previous Awami League government began importing Liquefied Natural Gas (LNG) in 2018. The government appeared more inclined towards imports rather than exploration. As a result, although a new PSC was formulated in 2019, no tenders were invited. It was only after three years that PSC-2023 was finalised. In the meantime, a multi-client two-dimensional seismic survey, covering 12,000 kilometres in offshore areas, was conducted by Norwegian and French joint venture TGS and Schlumberger. The findings suggested possible gas reserves, generating foreign company interest.
By late 2023, US multinational ExxonMobil expressed interest in exploring all 15 deep-sea blocks and proposed an agreement without a tendering process. However, the previous government ultimately did not accept the proposal. In March last year, the government invited tenders, with the submission deadline set for September. However, following the government’s fall in August, the interim administration extended the deadline by three months until December.
Petrobangla formed a committee to determine why no companies participated in the tender. The committee engaged with several foreign companies that had initially shown interest and collected their observations. Based on these inputs, a revised draft PSC is currently being prepared.
According to Petrobangla officials, surveys have indicated the presence of potential gas reserves in the Bay of Bengal. However, without drilling exploration wells, commercially recoverable reserves cannot be confirmed. Neighbouring countries India and Myanmar have already discovered gas fields in the same sea. The most recent PSC was drafted in consultation with foreign companies and several incentives were incorporated based on their feedback.
Under the revised framework, gas prices were linked to crude oil prices at 10 per cent, instead of being fixed, meaning gas prices would fluctuate with global oil markets. Additionally, a revenue-sharing model replaced the earlier profit-sharing arrangement. Despite these favourable terms, political factors are believed to have discouraged participation.
Geologist Badrul Imam told Prothom Alo that multinational companies invest globally. While they initially showed interest in the Bay of Bengal, the government failed to act promptly. By the time tenders were invited, these companies had possibly shifted their focus to other countries. He emphasised that the discovery of even a single gas field offshore would significantly boost foreign investment interest. Therefore, tenders should be issued promptly to resume offshore oil and gas exploration.