International Oil Companies (IOCs) are not interested in working oil and gas in the Bay of Bengal despite the huge potential of the prospective reserve.
Despite the much-discussed potential of the Bay of Bengal for oil and gas exploration, no multinational companies submitted bids for exploration rights.
Although seven international companies purchased tender documents, none submitted proposals, even after the extended deadline. The submission period ended at 1 PM on Monday.
Officials from Petrobangla believe two major factors contributed to this lack of interest: the country’s current internal political instability and the declining price of crude oil in the global market.
Under the current Production Sharing Contract (PSC), gas prices are aligned with the international Brent crude oil market.
This means gas prices fluctuate with changes in crude oil prices.
Petrobangla is now planning to investigate the reasons for the poor response and will consult with the companies that purchased tender documents.
Findings will be shared with higher government authorities, after which a decision will be made on re-tender bid documents.
Petrobangla Chairman Janendra Nath Sarkar confirmed the situation, stating,
“We will study the reasons internally and, if necessary, hold discussions with the companies. The findings will be communicated to the government, and a decision will be made regarding re-tender of the offshore bidding in the Bay.”
When asked about the companies’ lack of participation, he suggested that the pricing mechanism linking gas prices to Brent crude oil might have been a factor, as crude oil prices currently hover around $72 per barrel, lower than when the tender was announced.
Two senior officials, who wished to remain anonymous, also pointed to political instability in Bangladesh as a deterrent for investors.
They noted that past allegations of irregularities in major projects during previous governments might have created an additional trust deficit among multinational companies.
To attract investors, Petrobangla designed an attractive PSC framework. Under the 2023 PSC, gas prices are set to fluctuate with the price of Brent crude oil.
For every 1,000 cubic feet of gas, the price is set at 10% of Brent crude’s price. For example, if Brent crude is priced at $90 per barrel, the gas price would be $9. However, with crude oil prices now around $70–$72, gas prices are proportionately lower.
Several multinational companies, including ExxonMobil, Chevron, Petronas, TGS & Schlumberger, Inpex Corporation, CNOOC, KrisEnergy, and ONGC, had previously expressed interest in Bangladesh’s offshore blocks. Some, such as Chevron, ExxonMobil, and CNOOC, purchased seismic survey data but ultimately did not participate in the tender process.
Bangladesh’s maritime territory consists of 26 exploration blocks, 15 in deep water and 11 in shallow water. Currently, India’s ONGC is conducting exploration activities in two shallow blocks. The recent tender, issued on March 11, offered all 24 unallocated blocks for exploration, with a six-month submission period.
Following the resolution of maritime boundary disputes, Bangladesh gained ownership of 118,813 square kilometers of maritime territory.
However, past experiences, such as the departure of companies like ConocoPhillips, Santos, and Posco Daewoo due to disputes over pricing or unmet demands, have left a challenging legacy.
Petrobangla officials acknowledged that attracting large investments under the current circumstances is difficult. They emphasized that offshore exploration involves not just Petrobangla but also significant government and diplomatic efforts, given the strategic importance of such investments.
