Petrobangla is set to float international tenders for oil and gas exploration in 26 offshore blocks in the Bay of Bengal next week, unveiling a significantly revised production sharing contract (PSC) aimed at attracting major global energy companies amid growing pressure to reduce costly LNG imports.
"We are taking all necessary preparations to float international bids for offshore oil and gas exploration in the Bay of Bengal next Sunday," Energy and Mineral Resources Division Secretary Mohammad Saiful Islam said.
Officials said the new PSC introduces major fiscal and contractual reforms to address concerns that undermined previous bidding rounds. The changes were prepared following recommendations from consultancy firm Wood Mackenzie and reviewed by the Law Ministry.
According to the Energy Division, the revised terms aim to resolve longstanding concerns raised by international oil companies (IOCs) over gas pricing, cost recovery and operational flexibility.
US energy giants ExxonMobil and Chevron have already expressed interest in participating in the bidding round.
Under the revised tender conditions, IOCs will be required to relinquish only 20 per cent of awarded acreage during the exploration phase, compared with the previous requirement of 50 per cent.
Bangladesh has also overhauled its gas pricing formula to improve the commercial viability of offshore projects. Gas prices will now be linked to Brent crude oil instead of high-sulphur fuel oil.
Under the new pricing structure, deep-water gas production will receive 11 per cent of the three-month average Brent crude price, based on a floor price of US$70 and a ceiling of US$100 per barrel. Shallow-water production will receive 10.5 per cent, while onshore gas prices will range between 8 and 8.5 per cent depending on location.
The revised structure replaces a 2023 pricing model that offered a flat 10 per cent of Brent prices but failed to attract bids despite several companies purchasing tender documents.
Pipeline tariffs - another contentious issue in earlier negotiations - will now be determined through direct negotiations with successful bidders, while full recovery of infrastructure investment costs will continue to be allowed.
The updated framework also replaces the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR), aligning the contract structure more closely with international financial standards.
In another concession aimed at improving investor confidence, the government has reduced contributions to the workers' welfare fund from 5 per cent of profits to 1.5 per cent.
"The latest tender package has been made more attractive than previous rounds in an effort to draw greater interest from international energy companies," the Energy Division secretary said, citing revised gas tariffs, lower pipeline construction costs and reduced prices for geological and technical data.
He expressed hope that the revised terms and promotional efforts would generate a stronger response from investors this time.
A senior Petrobangla official, speaking on condition of anonymity, said several international oil companies were showing renewed interest in offshore exploration as fresh investments in some Middle Eastern energy projects slowed amid tensions involving Israel, Iran and the United States.
"So, we are hopeful about the prospects," the official said.
Last month, the Cabinet Committee on Economic Affairs approved in principle the revised PSC framework aimed at attracting foreign investment in offshore exploration.
"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," an official said.
Power, Energy and Mineral Resources Adviser Iqbal Hasan Mahmud said the offshore bidding initiative comes as Bangladesh faces mounting energy subsidy costs linked to volatile LNG prices and supply disruptions.
According to the Energy Division, the country's energy subsidy bill could exceed Tk19,000 crore in the current fiscal year, driven partly by rising LNG prices in the international market.
Officials also said preparations are underway for a separate onshore bidding round, which is currently under legal review.
As part of the offshore tender campaign, Petrobangla has initiated plans to organise international roadshows and communicate with potential bidders through foreign embassies.
