Bangladesh invites IOCs to bid for 26 offshore hydrocarbon blocks

Bangladesh launched an offshore bidding round on May 24, offering 26 hydrocarbon blocks for exploration to international oil companies, Minister of Power, Energy and Mineral Resources Iqbal Hasan Mahmood said.

"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," Mahmood told a news conference on May 24 while announcing the bidding round.

"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 added.

Of the 26 blocks, 11 are in shallow waters and 15 in deepsea areas of the Bay of Bengal, a document from state-run Petrobangla showed. The bid submission deadline is Nov. 30.

The offshore bidding round comes at a time when leading energy importers are increasing efforts to boost domestic energy production. The minister said the aim is to reduce the impact of the Middle East conflict and restrictions on ships passing through the Strait of Hormuz.

Incentives to attract companies

Petrobangla has enhanced the draft production-sharing contract to attract international oil companies in the bidding round, Mahmood said.

The mandatory contribution to the workers' profit participation fund has been reduced to 1.5% from 5.0%, and IOCs will have a total of nine years to explore their blocks, he added.

The initial exploration period will be six years, with the possibility of a three-year extension, Mahmood said, adding that IOCs would be allowed 100% cost recovery for both shallow and deepwater blocks, with an annual maximum limit of 75%.

The production period has been set at 25 years for gas fields and 20 years for oil fields, with a 10-year extension possible if commercial production continues, he said.

To participate in the bidding, operators must have a minimum daily production of 5,000 barrels of oil or 75 million standard cubic feet of gas for shallow blocks. For deepwater blocks, a minimum daily production of 10,000 barrels of oil or 100 MMscf of gas is required, he added.

In the 2012 bidding round, three shallow-water blocks and one deepwater block were awarded to contractors.

Currently, only two overseas companies 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, while KrisEnergy is producing natural gas from the Bangura field under Block 9.

There were two other rounds in 2017 and 2024, but neither attracted investor interest.