Bidding for offshore hydrocarbon exploration launched

Bangladesh Sunday launched long-awaited offshore bidding round with 26 hydrocarbon-exploration blocks on offer for international oil companies (IOCs) to grab under attractive contractual terms.
Iqbal Hasan Mahmood, Minister for the Ministry of Power, Energy and Mineral Resources (MPEMR), announced the opening of the bidding at a press conference in the secretariat, notably amid local and global energy volatility.
"Within three months of assuming office, we express gratitude to the Almighty for being able to announce the 'Offshore Bidding Round 2026' to engage international institutions for offshore oil and gas exploration," he says.
He recalls that Bangladesh's first successful bidding round was held in 1993, under the initiative of the previous BNP-led regime of Prime Minister Begum Khaleda Zia.
Several international companies inked production-sharing contracts (PSCs) for a total of eight blocks in onshore and offshore areas back then. Thereafter, so many contracts were never signed under any bidding round.
"Bibiyana, one of Bangladesh's largest gas fields, was discovered and Sangu, the country's first commercial offshore gas field, was discovered following the signing of the PSCs after the bid round," the minister told reporters.
Later, the winning of Bangladesh's maritime boundary against Myanmar and India was observed by the Awami League government.
The losers later in the arbitration discovered hydrocarbons but Bangladesh lagged behind, he deplores.
"I hope the initiative taken by the government in a very short time will receive responses from foreign investors, and through their exploration activities, new oil and gas fields will be discovered in our offshore areas." Mr Mahmood hopes.
"The country's resources belong to all of us and if oil and gas are extracted offshore, it will play an important role in energy security," he says.
Eleven of the offshore blocks on offer are located in shallow waters of the Bay of Bengal and 15 in deep-sea areas.
The shallow-sea blocks put on stake are SS-01, SS-02, SS-03, SS-04, SS-05, SS-06, SS-07, SS-08, SS-09, SS-10 and SS-11.
The deep-sea blocks are DS-08, DS-09, DS-10, DS-11, DS-12, DS-13, DS-14, DS-15, DS-16, DS-17, DS-18, DS-19, DS-20, DS-21 and DS-22.
The bid-submission deadline is November 30, 2026.
The newly elected BNP-led government launched the offshore bid round against the backdrop of the persistent Middle East crisis and restrictions on vessels passing through the Strait of Hormuz.
Petrobangla has sweetened the draft production-sharing contract (PSC) to attract IOCs in the bidding round.
Mandatory contribution to the workers' profit participation fund (WPPF) has been slashed to 1.5 per cent from the previous 5.0 per cent.
The IOCs will get a total of nine years to explore their won blocks of which initial exploration period will be six years with subsequent three years.
Minimum work obligation is confined to only seismic survey 2D or 3D seismic and drilling activities are kept biddable. Bank guarantees are required at different stages of exploration.
Cent-percent cost recovery will be allowed to the IOCs for both shallow -and deep- water blocks with an annual maximum limit of 75 per cent.
State-run Bangladesh Petroleum Exploration Company Ltd (BAPEX) will have 10- percent carried interest in shallow sea blocks.
Duty free facilities are on offer for imported equipment during exploration, development and production and the contractor's income tax will be borne by state-run Petrobangla.
Gas price is linked to international Brent crude with shallow sea at 10.5 per cent and deep sea at 11 per cent.
Floor and ceiling set based on the lowest and highest average of Brent over the past five years Contractors may sell gas to third parties and export under specific conditions.
To ensure reasonable profit for IOC investment, Petrobangla will pay tariffs for petroleum transportation in pipelines constructed in both shallow-and deep -sea blocks and tariff determination will consider distance, water depth, and gas volume.
Production period will be 25 years for gas fields, 20 years for oil fields, which will be extendable by 10 years if commercial production continues.
The IOCs will have to submit separate applications for each block they want to explore
For deep-sea blocks, opportunity will be there for a single contract covering two adjacent blocks.
Bidders may participate individually or form consortiums to join in multiple blocks.
To take part in the bidding operator must have minimum daily production of 5,000 barrels of oil or 75 MMSCF of gas for shallow blocks.
For deep-water blocks, minimum daily production of 10,000 barrels of oil or 100 MMSCF of gas is required for the operator.
Sources say not a single IOC participated in the latest offshore bidding round launched under the previous Awami League government, although several companies had purchased bid documents.
Market insiders say lack of confidence among IOCs, coupled with inadequate data on offshore blocks, contributed to the poor response.
Petrobangla had kept the offer open for nine months after floating the international tender on March 10, 2024.
At that time, 24 offshore blocks -- 15 deep-sea and nine shallow-water blocks -- were offered for exploration leases.
Before the latest bid round, Bangladesh had launched only one offshore bidding round over the past decade, in 2017, and that was limited to three deep-water blocks, according to Petrobangla.
Although Posco-Daewoo was awarded deep-water block DS-12 following the bidding, the company withdrew from the block in 2020 after conducting a 2D seismic survey.
Previously, Petrobangla floated another bidding round in 2012, through which three shallow-water blocks and one deep-water block were awarded to contractors.
Currently, four IOCs hold active PSCs, either individually or through joint ventures, for exploration in three shallow-water blocks in Bangladesh.
US oil-major Chevron is actively exploring and producing natural gas in three gas fields under onshore blocks 12, 13 and 14. Singapore-based KrisEnergy is producing natural gas from the Bangura field under Block 9. ONGC Videsh and Oil India are jointly exploring shallow-water blocks SS-04 and SS-09.
Azizjst@yahoo.com