Bangladesh is set to launch a new offshore bidding round next month, offering 26 exploration blocks in the Bay of Bengal as part of a sweeping effort to attract international oil companies (IOCs) and ease mounting pressure on its energy imports.
Officials say the 2026 licensing round will introduce significantly revised fiscal and contractual terms, including changes to gas pricing, pipeline cost recovery and work obligations—areas long criticised by investors as barriers to entry.
“We have reviewed the previous model production sharing contract (PSC) and introduced a pricing structure that will be adjusted within upper and lower ceilings every five years,” said Energy and Mineral Resources Division (EMRD) Secretary Mohammed Saiful Islam in remarks to Just Energy News.
Among the key changes, contractors will now be allowed to relinquish 20% of awarded acreage, down from the previous 50% requirement, offering greater operational flexibility. The government has also set a 1.5% allocation of profits to a Workers’ Welfare Fund, revised down from 5% following concerns raised by prospective investors.
Pipeline tariffs—another sticking point in earlier negotiations—will be determined through direct negotiation with successful bidders, officials said, while full cost recovery for infrastructure remains intact under petroleum sales agreements.
A central feature of the revised model is a shift in gas pricing, now linked to Brent crude oil rather than high-sulphur fuel oil. Deep-water gas will be priced at 11% of Brent’s three-month average, with a floor of $70 and a ceiling of $100 per barrel. Shallow-water output will receive 10.5%, while onshore projects will be priced at 8% in plains and 8.5% in hilly areas.
The move marks a departure from the 2023 framework, which offered a flat 10% of Brent—capped at $100—but failed to draw investor participation. In that round, only seven bid documents were purchased and none submitted, reflecting both pricing concerns and political uncertainty.
The updated terms also replace the LIBOR with the SOFR for financial calculations, aligning Bangladesh with global financial standards.
The reforms follow recommendations from consultancy Wood Mackenzie and have been vetted by the Legislative and Parliamentary Affairs Division under the Ministry of Law earlier this year.
Energy analysts have cautiously welcomed the changes but warn that investor confidence will hinge on political stability and regulatory consistency.
Speaking at a recent dialogue, Ijaz Hossain, a former professor at the Bangladesh University of Engineering and Technology, said Bangladesh must urgently assess its domestic gas potential to reduce its growing reliance on imports.
“Nearly 97–98% of our energy supply is fossil fuel-based, and around 60% is import-dependent,” he said, noting that rising liquefied natural gas (LNG) imports are placing severe strain on foreign exchange reserves.
He urged authorities to accelerate offshore exploration while also expanding onshore drilling, particularly in Bhola, and proposed raising funds through gas bonds to double exploration activity.
Hossain also highlighted inefficiencies in the gas system, estimating that around 10% of supply is lost to theft and mismanagement. With up to a third of gas now sourced from imported LNG, such losses translate into billions of dollars in wasted foreign currency annually, he warned.
The upcoming offshore round is seen as a critical test of whether Bangladesh can reposition itself as a competitive frontier market in the global energy sector while addressing its deepening energy security challenges.
Energy subsidy set to surge past Tk19,000cr
Bangladesh’s energy subsidy bill is poised to exceed Tk19,000 crore this fiscal year, as a sharp spike in global liquefied natural gas (LNG) prices and supply disruptions threaten to strain public finances and power generation, officials have warned.
The crisis has been triggered by damage to Qatar’s Ras Laffan gas facilities—operated by QatarEnergy—following a reported Iranian attack last week. The disruption has curtailed LNG supplies from one of the world’s largest exporters, forcing Bangladesh to turn to volatile spot markets at significantly higher prices.
“We are preparing a draft to raise the subsidy to Tk19,000 crore considering LNG tariffs at $20 per MMBtu,” Petrobangla chairman Md Arfanul Hoque told Just Energy News.
It was only $10.18 before war between Iran and Israel, official data showed. “However, tariffs have already crossed $25 per MMBtu after the attack, so the estimate may be revised further.”
Onshore Gas Reserve
Minister for Power, Energy and Mineral Resources Iqbal Hassan Mahmood has informed the Parliament that Bangladesh currently has an estimated 29.74 trillion cubic feet (TCF) of extractable natural gas reserve, says BSS report.
Of the total reserve, 22.11 TCF of gas had already been extracted as of December 31, 2025, while 7.63 TCF remained in reserve as of January 1, 2026.