Bangladesh has moved a step closer to launching a major offshore energy licensing round, as officials seek to revive investor interest and curb growing reliance on imported fuel.
The Energy and Mineral Resources Division (EMRD) has placed its proposed 2026 offshore bidding round before the Cabinet Committee on Economic Affairs for approval on Wednesday, a senior official confirmed today.
If approved, the government aims to launch the auction by 15 May, offering 26 exploration blocks in the Bay of Bengal. The initiative is part of a broader effort to attract international oil companies and ease mounting pressure from rising energy imports.
Mohammed Saiful Islam, secretary of the division, said the new round would feature “significantly revised” fiscal and contractual terms designed to address longstanding investor concerns.
Among the changes are adjustments to gas pricing, pipeline cost recovery and work commitments—areas widely seen as barriers under previous bidding frameworks.
“We have reviewed the earlier production sharing contract and introduced a pricing structure that will be adjusted within upper and lower ceilings every five years,” he said.
Revised terms
Under the updated model, companies will be allowed to relinquish 20 per cent of awarded acreage, down from the previous 50 per cent requirement, offering greater flexibility during exploration.
The government has also reduced the allocation to a workers’ welfare fund to 1.5 per cent of profits, from 5 per cent, following feedback from prospective investors.
Pipeline tariffs—another sticking point—will now be determined through direct negotiation with successful bidders, while full cost recovery for infrastructure investments will remain in place.
A key shift comes in gas pricing, which will now be linked to Brent crude rather than high-sulphur fuel oil. Deep-water gas prices will be set at 11 per cent 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 per cent, while onshore pricing will range between 8 and 8.5 per cent depending on location.
The move replaces a 2023 pricing model that offered a flat 10 per cent of Brent but failed to attract bids. Officials said only seven bid documents were purchased in that round, with none ultimately submitted.
The revised framework also replaces the LIBOR with the SOFR, aligning Bangladesh with global financial standards.
The reforms follow recommendations from consultancy Wood Mackenzie and have been vetted by the law ministry.
Investor confidence key
Energy analysts have cautiously welcomed the changes, though concerns remain over political stability and regulatory consistency.
Ijaz Hossain, a former professor at the Bangladesh University of Engineering and Technology, said Bangladesh must urgently expand domestic gas exploration to reduce dependence on imports.
“Nearly 97–98 per cent of our energy supply is fossil fuel-based, and around 60 per cent is import-dependent,” he said, warning that rising liquefied natural gas (LNG) purchases are placing significant strain on foreign exchange reserves.
He also highlighted inefficiencies in the system, estimating that around 10 per cent of gas supply is lost to theft and mismanagement—losses that translate into substantial financial costs given the increasing reliance on imported LNG.
Subsidy pressures mount
The offshore push comes as Bangladesh faces a sharp rise in energy subsidies, driven by surging global LNG prices and supply disruptions.
Officials warn the subsidy bill could exceed Tk19,000 crore (£1.4bn approx.) this fiscal year. The increase follows damage to gas facilities at Ras Laffan, operated by QatarEnergy, after a reported regional attack, disrupting supplies from one of the world’s largest LNG exporters.
According to Petrobangla, the state energy company, subsidy estimates are based on LNG prices of around $20 per MMBtu. However, spot prices have already risen above $25, suggesting further upward revisions may be needed.
Prior to the recent tensions, LNG prices stood at roughly $10.18 per MMBtu, underscoring the scale of the increase.
Gas reserves and future plans
In parliament, Energy Minister Iqbal Hassan Mahmood said Bangladesh’s recoverable natural gas reserves are estimated at 29.74 trillion cubic feet (TCF).
Of this, 22.11 TCF had been extracted by the end of 2025, leaving 7.63 TCF remaining as of January 2026.
Officials added that a separate onshore bidding round is also being prepared and has been submitted to the law ministry for review.
The forthcoming offshore auction is widely seen as a critical test of whether Bangladesh can position itself as a competitive frontier market while addressing deepening energy security challenges.