Despite Bangladesh’s high-profile tender for oil and gas exploration in its deep-sea blocks, none of the seven multinational companies (IOCs) that purchased tender documents submitted bids.
Petrobangla confirmed that several companies cited concerns via email, including high wheeling charges for pipeline transportation, costs linked to the Workers’ Profit Participation Fund (WPPF), excessive data purchase fees, and the country’s political climate.
Under Bangladeshi law, IOCs must allocate a portion of their profits to the WPPF. Some companies opposed this requirement, arguing that mandatory contributions undermined the incentives for significant investments. Additionally, labor disputes involving Chevron and its employees reportedly influenced participation.
Tender Details and Background
On March 11, 2024, Bangladesh invited tenders for oil and gas exploration across 24 offshore blocks—15 in the deep sea and 9 in the shallow sea. Initially set for a September 9 submission deadline, it was later extended to December 9. Notable companies, including ExxonMobil, purchased tender documents, with two firms acquiring seismic data from Petrobangla.
Despite these signs of interest, no bids were submitted by the deadline, prompting Petrobangla to cancel the tender.
In response, Petrobangla formed a committee, led by PSC Director Altaf Hossain, to investigate the lack of participation. While Hossain declined to share specific findings, company feedback indicated concerns over investment returns and contractual terms.
Updated PSC and Challenges
Bangladesh revised its Production Sharing Contract (PSC) terms in 2019 to attract investors. Gas prices were tied to Brent crude, set at 10% of Brent’s value per thousand cubic feet (MCF)—a significant increase from prior fixed rates of $5.6 and $7.25 per MCF for shallow and deep-sea blocks, respectively.
The government also lowered its profit-sharing ratio, with shares ranging from 35% to 60% for deep-sea blocks and 40% to 65% for shallow-sea blocks, depending on production levels.
However, experts argue that certain PSC requirements, such as eligibility criteria for companies with a minimum production capacity of 20,000 barrels of oil equivalent per day, exclude many potential bidders. Makbul-e-Elahi Chowdhury, a former PSC committee head, recommended lowering capacity thresholds to 10,000 barrels for deep-sea exploration and 5,000 barrels for shallow-sea projects to broaden participation.
Concerns Moving Forward
Following the maritime boundary settlement, Bangladesh secured 118,813 square kilometers of offshore territory. Yet, only two shallow-sea blocks are currently being explored by India’s ONGC.
The lack of bidders, despite improved PSC terms, underscores persistent challenges that Bangladesh must address to make its offshore projects more attractive to global investors.
Bangladesh offshore tender draws no bids, MNCs cite several concerns
