Bangladesh is seeking fresh foreign investment in offshore oil and gas exploration as worsening gas shortages increase pressure on energy security.
The government has revised its Model Offshore PSC 2026, opened 26 blocks for bidding, and planned international roadshows to attract credible investors.
However, uncertainty over the investment environment, institutional capacity and previous failed initiatives remains a concern.
The success of the latest bidding round will depend not only on improved contractual terms but also on the country’s ability to build investor confi dence Bangladesh’s latest offshore bidding round has become a test of whether the country can turn its largely unexplored maritime territory into a meaningful source of energy security.
With gas shortages deepening and LNG imports placing increasing pressure on the economy, the government is seeking fresh investment in oil and gas exploration while offering revised contractual terms and a more active international promotional campaign.
The challenge is not simply to attract bids.
Bangladesh must also convince international oil companies that its investment environment is stable, its institutions are capable, and its offshore opportunities justify the risks of long-term exploration.
The outcome of the 2026 bidding round could therefore shape the country’s energy strategy for years to come.
Petrobangla and the Energy Division are particularly hopeful about the ongoing offshore bidding round, which is scheduled to close on November 30.
However, stakeholders remain cautious because the previous bidding round, which ended in December 2024, failed to receive a single investment proposal despite considerable expectations.
Investment analysts and economists believe that foreign investors were reluctant to make long-term investments such as offshore oil and gas exploration during the tenure of the interim government.
They preferred to wait until an elected government took offi ce.
In addition, some concerns remained over the terms of the Model Offshore PSC.
New PSC and 26 Offshore Blocks Following the failure of the 2024 bidding round, the government formed a committee to identify the reasons behind the lack of bids.
Based on the committee’s recommendations, the Model Offshore PSC was updated to the 2026 version.
An international bidding process based on the revised PSC was launched on May 24, offering a total of 26 offshore blocks-15 in deepwater areas and 11 in shallow-water areas.
So far, Trkiye’s Turkish Petroleum Corporation (TPAO) and China National Offshore Oil Corporation (CNOOC) have purchased bidding documents.
According to Petrobangla sources, British Petroleum (bp), ExxonMobil and China National Petroleum Corporation (CNPC) have also been maintaining regular communication and are expected to purchase bidding documents.
Asked about the prospects, Petrobangla Director (PSC) Engineer Md.
Shoaeb said, ‘We are optimistic about receiving investment proposals from international companies this time.’ Investment Environment Remains Crucial Energy and investment analysts say Petrobangla failed to take adequate and well-planned initiatives to attract investment in offshore oil and gas exploration during the 1990s.
They believe the revised Model Offshore PSC 2026 now offers substantial economic and technical incentives to international oil companies.
Representatives of international oil companies have also acknowledged that the new PSC has become more attractive.
However, analysts stress that favorable contractual terms alone are not enough.
The overall investment environment is equally important for foreign investors.
With an elected government now in offi ce, some of the uncertainty surrounding Bangladesh’s investment environment has eased.
However, no comprehensive campaign to continuously attract investors to the country’s offshore oil and gas sector had been launched until recently.
Analysts have particularly pointed to the absence of a full-time chairman at Petrobangla for nearly six months, saying the situation could affect sustained efforts to attract international investment, as Petrobangla is the focal point for offshore exploration.
Government Steps Up Investment Promotion Offi cials of the Energy Division, however, reject allegations that the government has been unprepared to promote the offshore bidding round.
They said Prime Minister Tarique Rahman called for investment in Bangladesh’s oil and gas exploration sector during his visits to Malaysia and China.
The Foreign Minister also sought investment during visits to various countries.
Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood and State Minister Anindya Islam Amit have also urged international companies to invest in oil and gas exploration in Bangladesh during their overseas engagements.
Bangladesh missions in North America and Europe have also been asked to convey investment opportunities to potential companies.
At the same time, Petrobangla has invited companies from different countries with expertise in offshore exploration to participate in the bidding process.
Three International Roadshows Planned The government has also adopted a planned international promotional strategy to attract investment in Bangladesh’s offshore oil and gas sector.
Petrobangla’s consultant Wood Mackenzie, which was involved in preparing the draft Model Offshore PSC, has also been appointed as a consultant for the investment promotion campaign.
Three promotional events are planned in London, Houston and Singapore.
As part of the campaign, a Petrobangla delegation will make a special presentation at the World Energy Summit in London on September 29- 30.
A large number of global energy companies are expected to attend the upstream-focused event.
A dedicated session will present Bangladesh’s offshore bidding opportunities to potential investors, followed by meetings between interested companies and offi cials from the Energy Division and Petrobangla.
The delegation will be led by State Minister for Energy Anindya Islam Amit and Invest Bangladesh Executive Chairman Ashik Chowdhury.
Petrobangla’s second roadshow will be held in Houston, the United States, on October 5-7.
Sources said around 40 international oil and gas companies are expected to participate.
Following the formal presentation, one-on-one meetings will be held with interested companies.
The fi nal roadshow is scheduled to take place in Singapore on October 15-16.
Bangladesh will participate in a special session at an oil and gas sector conference to highlight investment opportunities in the Bay of Bengal.
Petrobangla and Energy Division offi cials will subsequently hold one-on-one meetings with interested companies.
What the Model Offshore PSC 2026 Offers The international tender for exploring and producing oil and gas from 15 deepwater and 11 shallow-water blocks was fl oated on May 24, with bids to be submitted by November 30.
The price of the bidding document has been set at US$7,000.
The previous offshore bidding round was launched in March 2024.
Seven internationally renowned companies, including US-based ExxonMobil, purchased bidding documents, while two companies also purchased data from Petrobangla.
However, amid the political situation and other uncertainties, none of the companies ultimately submitted bids.
As a result, the 2024 offshore bidding round was eventually declared abandoned.
The government now hopes that the revised PSC, improved investment climate and international promotional campaigns will help attract credible international investors to Bangladesh’s largely unexplored offshore resources and open a new chapter in the country’s oil and gas exploration.
Offshore Model PSC 2026 Offers More Attractive Terms for Global Energy Investors Offi cials from Petrobangla and the Energy Division say the Offshore Model Production Sharing Contract (PSC) 2026 incorporates policies and practices followed by leading energy-producing countries, making Bangladesh’s offshore investment framework more attractive from both technical and commercial perspectives.
Under the new PSC, natural gas prices will be linked to international Brent crude oil prices.
Gas will be priced at 10.5 percent of the Brent crude price for shallow-water offshore blocks and 11 percent for deepwater blocks.
Floor and ceiling price mechanisms have also been introduced to protect both investors and the government from excessive market volatility.
A new provision has been included for deepwater pipeline transportation.
If gas is discovered in shallow- or deepwater blocks, high-pressure subsea pipelines may be required to transport processed gas to onshore facilities.
Petrobangla will be able to pay tariffs for petroleum transportation through privately constructed pipelines, allowing investors to earn a reasonable return on their investment.
The Bangladesh Labour Rules 2015 have also been amended to reduce the Workers’ Profi t Participation Fund (WPPF) contribution for fully foreignowned energy companies from 5 percent to 1.5 percent.
To encourage international oil company (IOC) participation, new geological and geophysical data packages have been prepared.
The cost of purchasing these packages has been reduced by 50 percent.
The total exploration period under the PSC will be nine years, comprising an initial six-year exploration period and a subsequent three-year period.
The initial period includes four years for geological, geophysical and seismic surveys and two years for drilling.
Under the mandatory work program, seismic surveys will be compulsory, while additional 2D/3D seismic surveys and drilling commitments will be determined through the bid work program.
The PSC requires bank guarantees of US$3 million for four years of geological and geophysical work, US$20 million for the two-year drilling phase, and US$20 million for the subsequent three-year exploration period.
Investors will be allowed to recover 100 percent of exploration and development costs in both shallowand deepwater blocks, although annual cost recovery will be capped at 75 percent of production revenue.
The government’s profi t-sharing entitlement will range from 40-65 percent in shallow-water blocks and 35-60 percent in deepwater blocks.
A mandatory 10 percent carried interest for BAPEX will apply to shallow-water blocks.
The PSC also provides tax benefi ts, including duty-free imports of equipment and materials used in exploration and development activities.
Petrobangla will bear the contractor’s corporate income tax obligations.
If oil is discovered, its price will be determined based on prevailing fair market prices in South and Southeast Asia.
Contractors will be allowed to sell their share of gas to third parties in the domestic market, subject to Petrobangla’s right of fi rst refusal.
If no domestic buyer is available, contractors will have the right to export the gas.
Investor protection provisions include stabilization and antiexpropriation clauses.
The PSC sets a commercial discovery bonus of US$3 million, while production bonuses range from US$500,000 to US$6 million for gas and US$500,000 to US$4 million for oil.
Contractors will also contribute US$0.10 per barrel of profi t oil and US$0.004 per MCF of profi t gas for research and development activities.
Annual contract service fees will be US$200,000 during the exploration and development phase and US$300,000 during the production phase.
Annual training contributions will be US$150,000 during exploration and development and US$200,000 during production.
The production period will be 25 years for gas fi elds and 20 years for oil fi elds.
These terms may be extended by an additional 10 years if commercial production continues.
Offi cials believe the revised Offshore Model PSC 2026 will strengthen investor confi dence and help attract international energy companies to explore the Bay of Bengal’s untapped oil and gas resources, supporting Bangladesh’s long-term energy security.
Onshore PSC Also Awaiting Final Approval Alongside the Model Offshore PSC 2026, Petrobangla has also fi nalized a draft Model Onshore PSC.
However, due to various objections raised by the Law Ministry, the Energy Division has not yet been able to fi nalize the document and send it to the Cabinet for approval.
Under the proposed Onshore PSC, gas prices will be linked to oil prices.
The price of onshore gas has been proposed at 8 percent of the Brent crude price per unit, while other incentives and provisions have largely been modeled on the offshore PSC.
Experts believe that if the Onshore PSC could be fi nalized before the upcoming international roadshows, it could also have been presented to potential investors.
This would have allowed Bangladesh to begin promotional activities for onshore investment ahead of launching the bidding round.
They also stressed the need to urgently update the onshore block map and open the blocks for investment alongside fi nalizing the PSC.
Vast Offshore Potential Remains Untapped Following the settlement of maritime boundary disputes with Myanmar in 2012 and India in 2014 through international courts, Bangladesh established its sovereign rights over more than 118,813 square kilometers of maritime territory.
However, successive governments have failed to make effective use of this promising offshore area for oil and gas exploration.
The interim government also followed a similar path, leaving the country’s offshore potential largely unexplored.
Myanmar has been producing gas for years from fi elds located on its side of the maritime area adjacent to Bangladesh, raising expectations that Bangladesh could also have signifi cant hydrocarbon resources in its offshore territory.
Previous Offshore Exploration Efforts In 2008, Bangladesh signed contracts with US-based ConocoPhillips for offshore blocks DS-10 and DS-11.
The company later sought amendments to some terms, including an increase in the gas price.
When Bangladesh did not accept its proposals, ConocoPhillips withdrew from the projects in 2014.
Under the 2012 offshore bidding round, Petrobangla signed agreements with ONGC Videsh Limited for blocks SS-4 and SS-9.
In 2017, Petrobangla awarded block SS-12 to international oil company POSCO Daewoo.
The company subsequently relinquished the block in 2020.
Before the 2024 bidding round, Bangladesh’s previous offshore tender had been invited in 2016.
Although the PSC was updated in 2019, no fresh bidding round was launched.
It took the Awami League government several years to update the Production Sharing Contract before fi nally inviting the 2024 tender.
Gas Crisis Deepens Bangladesh’s long-growing gas crisis has now become more severe.
Last July, the failure of one of the country’s two Floating Storage and Regasifi cation Units (FSRUs) caused gas supply to fall to around half of demand.
Although the FSRU subsequently resumed operations, LNG supply has yet to return to normal because of continuing disruptions.
At the same time, the cost of LNG imports has increased signifi cantly.
The ongoing confl ict in the Middle East is also reducing the availability of LNG under long-term contracts, increasing pressure on Bangladesh to purchase more LNG from the spot market.
Energy Shortages Hit Industry A recent Bangladesh Business Climate Survey by Policy Exchange Bangladesh and the Metropolitan Chamber of Commerce and Industry found signifi cant gaps between gas demand and supply across various sectors.
According to the survey, gas supply is 42 to 80 percent below demand in different sectors.
Industrial areas are also experiencing an average of six hours of load-shedding every day.
Energy and power shortages are disrupting industrial production by between 25 and 50 percent, depending on the region.
Overall, Bangladesh’s dependence on imported energy and electricity has reached 62.5 percent, with imports continuing to grow and the annual import bill rising steadily.
Offshore Bidding Round 2026 Crucial for Energy Security Given the changing global and regional energy landscape, experts say Bangladesh urgently needs to develop and utilize its own energy resources.
Oil and gas exploration onshore is continuing through domestic investment, but the pace has fallen short of expectations.
Although Bangladesh was among the fi rst countries in the region to initiate offshore oil and gas exploration, it has now fallen considerably behind its neighbors.
None of the initiatives taken over the past two decades has produced the expected results.
Against this backdrop, the Offshore Bidding Round 2026 has become particularly important for Bangladesh.
Experts warn that failure to attract investors this time could once again leave exploration in the Bay of Bengal uncertain.
They believe that without long-term success in developing the country’s offshore resources, Bangladesh’s energy crisis could become more acute, further increasing dependence on imported energy and putting additional pressure on the economy