After more than a decade of stalled offshore gas exploration, momentum is finally building to revive efforts in the Bay of Bengal. The initiative, which has faced repeated setbacks, is now spearheaded by the interim government, which assumed power following the fall of the Awami League administration. The hope is that these renewed efforts will tap into the sea’s largely untouched “blue economy.”
Energy Advisor Fouzul Kabir Khan emphasized the urgency of the process in an interview, highlighting that the initial phase of offshore exploration is almost complete, with the selection of exploration companies nearing finalization. The bidding process has attracted interest from two American multinational firms and five Asian oil and gas companies, though the full scope of this interest will be clearer on Monday, when bids are due.
Zanendra Nath Sarker, chairman of Petrobangla, which oversees the bidding process, expressed optimism that the exploration push will garner significant interest. Seven international companies have collected the necessary tender documents, and the evaluation process will begin after the 1pm deadline for bid submissions.
A Long Road to Offshore Exploration
Bangladesh’s offshore exploration has been fraught with challenges. Following the failure of a previous attempt in 2019, the government issued a new round of tenders earlier this year. In March, it invited bids for 24 sea blocks, including nine shallow and 15 deep-sea blocks. The initial deadline of September 9 was extended to December 9 after a political upheaval in August.
Among the companies expressing interest are U.S.-based ExxonMobil, which has joined the competition alongside Chevron, another American company with a focus on land-based exploration. Other interested parties include Singapore’s KrisEnergy, India’s Oil and Natural Gas Corporation (ONGC), Japan’s Inpex, Thailand’s PTT Exploration and Production, and China’s CNOOC.
Petrobangla is now awaiting to see how many of these companies follow through with their bids. Companies paid $10,000 for the tender documents, but their actual interest will only become clear when they submit their proposals.
Potential for Offshore Gas Remains High
Energy expert Professor M. Tamim told that offshore exploration is crucial for Bangladesh’s future energy needs, especially as demand for gas continues to outpace supply. Despite past struggles to attract international contractors, the new production-sharing contract (PSC) model, which provides more favorable terms, could provide a much-needed boost.
“Since this is a major investment, it will depend on the final contractors,” Tamim added.
The Sangu gas field, discovered in 1996 in the Bay of Bengal, was Bangladesh’s only significant offshore gas source, but it was shut down in 2013 after depleting its reserves. Since then, the country has struggled to find additional sources of offshore gas, with several plans proposed but none succeeding.
Challenges in Attracting Investment
Over the years, multiple attempts to lease offshore blocks have met with failure. In 2014, Indian company ONGC signed contracts for shallow-sea blocks, but the exploration remains incomplete. Other international companies, such as South Korea’s POSCO Daewoo and Australia’s Santos, exited after initial explorations yielded no results.
The new exploration push, led by the interim government, aims to break this cycle. Fouzul Kabir Khan noted that the government is prioritizing the bidding process, with two committees already formed to evaluate proposals and minimize delays.
Rising Gas Demand
With industrial growth driving up demand, Bangladesh’s national gas grid currently supplies about 2,800 million cubic feet of gas daily. However, the government’s estimates place daily demand at around 3,600 to 3,800 million cubic feet. To meet this shortfall, the government has been increasing imports of liquefied natural gas (LNG), but tapping into offshore gas could reduce reliance on costly LNG.
Emerging of Offshore Gas Exploration
Bangladesh’s maritime boundaries were officially resolved in 2014, opening up 118,813 square kilometers of the Bay of Bengal for exploration. The country has since divided this area into 48 blocks—22 onshore and 26 offshore. Despite initial optimism, bidding rounds between 2014 and 2019 yielded little success.
The new PSC model, which was introduced in 2023 after several years of delays, offers a more competitive structure. A key feature is an increase in the international companies’ production share by 5 percent, making it more attractive for potential investors. However, the government has ensured that the price of gas will remain capped at 10 percent of Brent crude oil prices, and foreign companies will be required to prioritize Bangladesh in selling any gas produced.
As the bidding process moves forward, Petrobangla and the interim government are hoping that this new approach will yield better results and help Bangladesh secure a stable source of offshore energy for the future.
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