Despite uncertainty over the timing of the 2025 bidding round for onshore and offshore exploration ahead of the national elections, Petrobangla has finalised the Offshore Model Production Sharing Contract (MPSC) 2025, introducing major reforms in gas pricing, pipeline cost recovery, and work obligations to attract international oil companies (IOCs).
The draft was submitted to the Energy and Mineral Resources Division (EMRD) on Tuesday for approval. According to official documents, the new model links gas prices to Brent crude oil, moving away from the outdated high-sulphur fuel oil (HSFO)-based structure.
Under the proposal, gas from deep sea blocks will be priced at 11% of Brent’s three-month average, with a $70-$100 per barrel floor and ceiling. Shallow sea blocks will receive 10.5% of Brent, while onshore exploration will fetch 8% on plain land and 8.5% in hilly areas.
The 2025 framework marks a significant shift from the 2023 model, which offered a flat 10% of Brent (capped at $100) but failed to generate investor interest – only seven bid documents were purchased and none submitted amid political uncertainty. Previously, ceiling prices were fixed at $5.6 per MMBtu for shallow sea gas and $7.26 for deep sea blocks.
The changes follow recommendations by global consultancy Wood Mackenzie in 2022 and are designed to align Bangladesh’s terms with international benchmarks.
The draft also retains full cost recovery for pipelines and facilities, with tariffs to be set under petroleum sales agreements. To accelerate exploration, it introduces stricter minimum work obligations, requiring contractors to undertake extensive 2D and 3D seismic surveys soon after contracts take effect.
Another notable update is the replacement of the LIBOR benchmark with the SOFR (Secured Overnight Financing Rate) for payment terms.
Energy experts have cautiously welcomed the reforms. They say the framework’s success will depend on investor confidence and political stability.
“We are taking all preparations for inviting bids for both onshore and offshore exploration, but the final decision will be made by the next elected government,” EMRD Secretary Mohammad Saiful Islam told Just Energy News on Tuesday.
Prof. M. Tamim, energy analyst and Vice Chancellor of Independent University, Bangladesh (IUB), warned of an impending supply crunch.
“The gas sector in Bangladesh is heading toward disaster within four to five years. Supplies will fall rapidly, and without alternatives, even households will struggle to use burners,” he said.
He noted that Bangladesh spends about $13 billion annually on energy imports, weighing heavily on the economy. “Since 2001, the country has not provided a truly foreign investment-friendly environment. Except for Chevron, no major IOC has invested here due to negative perceptions. Successive governments have avoided bold reforms,” he added.