Ag ainst the backdrop of a chronic energy crisis, the Bangladesh government, led by the BNP alliance, has launched a new Production Sharing Contract (PSC) bidding round for offshore exploration in the Bay of Bengal.
the initiative is considered a major step toward strengthening the country’s long-term energy security through the discovery and development of offshore petroleum resources.
the updated Model PSC (MPSC) 2026 includes a range of incentives aimed at attracting international oil companies (IOCs) to invest in both shallow and deep-sea blocks. Given continuing volatility in global oil and gas markets, along with growing regional energy demand, the revised terms are expected to encourage participation from major global energy companies. However, the success of the bidding round will largely depend on how effectively the government manages geopolitical sensitivities, ensures transparency and accountability, and guarantees equal treatment for all bidders.
offshore exploration and development typically require six to seven years before production can begin. Some deepwater blocks are located nearly 400 kilometers from the coast, and major discoveries may require subsea pipelines or Floating Lique?ed Natural Gas (FLNG) facilities, potentially extending development timelines to eight to ten years.
even so, successful offshore gas discoveries could become a gamechanger for Bangladesh’s medium-term energy security. Bangladesh secured sovereign rights over a vast maritime area in the Bay of Bengal following international arbitration, gaining control over an offshore region nearly equal in size to its land territory. Geological assessments suggest strong hydrocarbon potential in the offshore basin. Neighboring India and Myanmar have already discovered substantial offshore gas reserves and are bene?ting economically from them. Bangladesh, however, delayed offshore exploration for years due to policy hesitation, overly conservative approaches, and confusion created by sections of civil society lacking a clear understanding of PSC arrangements. Growing geopolitical competition among global powers such as the United States, China, and India in the Bay of Bengal has also added complexity.
understanding Production Sharing Contracts A PSC is essentially an agreement between a state-owned enterprise and an international oil company for the exploration and development of petroleum resources.
ownership of the resources remains with the state.
under the arrangement, IOCs undertake exploration at their own risk and expense.
if commercially viable reserves are discovered, the IOC recovers its investment through a portion of production known as ‘cost petroleum,’ while the remaining ‘pro?t petroleum’ is shared with the stateowned enterprise according to an agreed formula. Pricing mechanisms are a critical component of PSC agreements, with market risks shared between the IOC and the state entity.
therefore, PSCs do not transfer ownership of national resources to foreign companies. Rather, IOCs serve as investors, developers, and operators.
it is worth noting that Chevron currently accounts for nearly 60 percent of Bangladesh’s total gas production from three gas ?elds. Many of the country’s major gas ?elds-including Titas, Habiganj, Bakhrabad, Rashidpur, Bibiyana, Kailashtila, and Sangu-were discovered by international oil companies. Bangladesh has not concluded any major successful onshore PSC agreements since 2000, and several offshore PSC initiatives were also poorly managed. Much of the current gas crisis could have been avoided if exploration efforts had continued through partnerships between IOCs and BAPEX. Key Features of Offshore Bidding Round 2026 Earlier offshore bidding rounds received weak responses due to inadequate ?scal and ?nancial incentives.
the updated MPSC 2026 attempts to address those concerns through more attractive commercial terms.
the bidding round covers all 26 offshore blocks-11 shallow-sea (SS) blocks and 15 deep-sea (DS) blocks. Separate applications are required for each category, although bidders may apply jointly for two adjacent deep-sea blocks under a single contract. Companies may submit bids individually or through consortium arrangements. Separate work programs and bank guarantees must be submitted for each deep-sea block, even under joint applications.
each block will be evaluated independently.
the deadline for bid submission is November 30, 2026. Prequali?cation Requirements For shallow-sea blocks, bidders must demonstrate a minimum production experience of 5,000 barrels of oil per day or 75 million cubic feet of gas per day from at least one offshore acreage. For deep-sea blocks, the requirement rises to 10,000 barrels of oil per day or 100 million cubic feet of gas per day. Bidders must also have at least one international exploration and production experience outside their home country.
the bid package includes an information package, promotional package, and data package.
these provisions are broadly consistent with PSC frameworks used in countries such as India, Myanmar, Thailand, and Vietnam. Previous PSC terms related to gas pricing, third-party sales, export provisions, pipeline tariffs, and bonus structures failed to attract suf?cient IOC interest.
the updated framework offers more ?exible and commercially attractive terms.
the revised provisions on gas pricing, third-party sales, and export rights areexpected to address investor concerns regarding market risks. Bangladeshis should not be overly concerned about export provisions, as domestic gas shortages and rising future demand are likely to absorb most future production within the country. Petrobangla and the Energy and Mineral Resources Division (EMRD) must ensure a transparent and competitive evaluation process that builds investor con?dence.
the pricing of data packages should also be reviewed to encourage broader participation rather than maximize short-term revenue from data sales. Government agencies should proactively engage with foreign missions and international investors. Bangladesh could organize a major roadshow in Dhaka, inviting potential investors and development partners. Diplomatic missions in the United States, the United Kingdom, Australia, France, the Netherlands, Russia, Norway, China, India, Malaysia, Indonesia, Qatar, the UAE, and Saudi Arabia should actively encourage companies from their respective countries to participate. BAPEX could also consider forming partnerships with leading Bangladeshi business groups for joint bidding in offshore blocks, helping develop domestic expertise alongside international operators. Reports suggest that ExxonMobil is particularly interested in all 15 deepwater blocks. Bangladesh has also entered into a long-term energy cooperation framework with the United States.
the government must ensure that the open bidding process remains free from geopolitical complications that could discourage participation from companies based in Russia, China, or elsewhere. Given the Bay of Bengal’s strategic importance, Bangladesh must pursue smart and balanced energy diplomacy. Conclusion Bangladesh should engage intensively with potential investors through proactive and strategic energy diplomacy.
in addition to pre-bid meetings, a well-organized international roadshow should be held in Dhaka, preferably between August and September. Based on investor feedback, minor adjustments to the MPbe considered.
offshore exploration requires multi-billion-dollar risk investments, and investors must feel con?dent about the commercial environment and potential returns. Bangladesh’s past PSC experiences, including the Scimitar and Niko controversies, damaged investor con?dence.
the government must now work proactively with successful bidders to ensure transparent and mutually bene?cial agreements.
offshore gas exploration is critical for Bangladesh’s medium-term energy security.
at the same time, the government should also consider launching a fresh PSC bidding round for onshore exploration areas.