No bids in 9 months for Bangladesh's offshore oil-gas exploration

The government's tender for oil and gas exploration in the Bay of Bengal has failed to attract any bidders in nine months, despite initial interest from several international companies.

Seven companies had purchased the tender documents, but none submitted proposals within the deadline which ended this afternoon, according to Energy Division and Petrobangla sources.

The Business Standard contacted Energy and Mineral Resources Division Secretary Mohammad Saiful Islam today for comments on the matter, and he said, "This is not unusual and is part of the process."

"Just because we invite tenders does not mean companies will immediately respond. It's a lengthy process. We will hold further discussions to understand what international companies expect, what are the problems, and where we need to improve," he elaborated.

"In India, tenders are invited throughout the year. Therefore, we will review the situation and make a decision accordingly," he added.

On 10 March this year, Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) floated the international tender to explore 15 deep-sea and 9 shallow-sea blocks.

Initially, the tender's submission deadline was set for 9 September. However, the interim government, led by Prof Yunus, extended it by three months, considering the political situation in the country following the ousting of the Awami League government on 5 August.

According to energy sources, after the tender was announced, letters were sent to 55 companies from various countries, inviting them to participate. Subsequently, seven companies purchased the tender documents.

But no companies submitted proposals by the final deadline.

Bangladesh resolved its maritime boundary disputes with India in 2012 and Myanmar in 2014. Although a new Production Sharing Contract (PSC) was introduced in 2019 to facilitate oil and gas exploration in the sea, no tenders were called then.

After three years of preparation, the new PSC-2023 was finalised. Unlike previous agreements, this PSC did not set a fixed price per unit of gas. Instead, the gas price was pegged at 10% of global oil prices. As oil prices increase, gas prices will also rise, and similarly, they will decrease if oil prices fall.

Challenges in attracting bidders

According to Energy Division officials, the PSC deliberately avoided setting a fixed gas price to attract international exploration companies.

However, the recent decline in global oil prices has made this flexible pricing model less appealing, discouraging potential investors.

A senior official from the Energy Division, speaking on condition of anonymity, stated that one of the key reasons for the lack of interest from international companies might be the current political situation in Bangladesh.

Another concern was the country's political scenario. "Oil and gas exploration involves long-term investments," the official added.

"With an interim government in place and its tenure uncertain, companies are hesitant to commit to long-term, large-scale investments. Future governments may re-evaluate or cancel agreements made by this administration – similar to what the current government is doing – repealing several laws [from the previous administration] and discussing the reevaluation of agreements"  

According to the official, the global oil market situation could also be a factor.

Petrobangla sources say several companies, including US-based Chevron and ExxonMobil, Japan's Inpex and Jogmec, and China's CNOOC International Limited, had purchased multi-dimensional survey data on Bangladesh's offshore blocks.

However, none of them ultimately participated in the tender.  

Apart from these companies, Malaysia's Petronas, the Norway-France joint venture TGS and Schlumberger, Singapore's KrisEnergy, and India's ONGC had shown interest and communicated with Petrobangla at various times regarding potential exploration opportunities.

In an effort to attract interest from various companies, Petrobangla had organised a seminar last May following the tender announcement. Over 15 international companies participated in the event.  

During the seminar, the results of a 12,000-kilometre 2D seismic survey conducted by TGS and Schlumberger were presented, showcasing the potential of offshore areas for exploration.