Petrobangla has just received the final draft of the Production Sharing Contract (PSC) for onshore oil and gas exploration. The draft was prepared by UK-based consultancy firm Wood Mackenzie. Now, Petrobangla wants to finalize the process quickly and float an international tender to speed up exploration.
A special expert committee, formed by the Energy Division, has already reviewed the draft and made several suggestions and corrections. Once Petrobangla finalizes those recommendations, the revised version will be sent back to the Energy Division. After that, the draft will go through legal vetting by the Ministry of Law. If everything stays on track, the process is expected to be completed by June. After that, Petrobangla will move forward with the official tender.
Since offshore exploration failed to gain much traction from foreign companies, authorities are now focusing on onshore areas as a quicker solution to boost gas supply. Petrobangla officials believe the campaign will likely start from remote hill regions.
An official from Petrobangla, speaking on condition of anonymity, told Bonik Barta, “Wood Mackenzie sent us a revised draft of the PSC. We’ve already done a paper presentation on it. A 16-member expert committee from the ministry reviewed it and made several suggestions. Petrobangla’s own PSC committee also held a meeting based on Wood Mackenzie’s report. Once we incorporate the suggested changes, we’ll send it to the Energy Division. If they recommend further changes, we’ll include those before sending it to the Law Ministry for vetting. The ministry will also collect public feedback on the final version. This whole process will take at least two months, so we’re targeting June to finalize the onshore PSC.”
According to Petrobangla sources, offshore drilling is time-consuming and expensive. In contrast, onshore exploration can be completed much faster and holds more immediate promise given the country’s growing demand. Based on 2D seismic surveys, the available blocks have already been categorized into high, medium, and low potential zones. Local exploration companies will be allowed to participate in the international tender under the onshore PSC. Selection will be based on technical capacity, financial strength, and manpower.
Gas production from local fields has been gradually declining. At present, Bangladesh produces around 1,858 million cubic feet of gas per day. Out of that, Chevron alone supplies about 1,135 million cubic feet daily, while three local companies together produce just over 720 million cubic feet on average.
Experts say large-scale onshore exploration is essential to ramp up domestic gas production. They also believe the PSC should be designed in a way that encourages participation from both local and foreign companies. The gas crisis is already severe, and the grid needs immediate supply. Given the urgency, international companies might be interested in partnering with BAPEX or even working as contractors.
Energy expert and geologist Professor Badrul Imam told Bonik Barta that there are still many unexplored areas onshore, and these areas may hold significant gas reserves. “If the onshore PSC is updated in a way that attracts foreign companies, we could find gas quickly. The gas crisis in the country is severe, so the PSC must be appealing enough to bring in good companies. But while doing that, we also need to carefully balance profit-sharing so that Bangladesh’s interests are protected,” he said.
Last March, under the Awami League government, Bangladesh invited international bids for offshore exploration under a newly updated PSC. The bidding window was open for nine months. Although seven companies bought bid documents, none of them eventually submitted any bids. In August, following the fall of the Awami League government, an interim administration took over.
According to Petrobangla officials, political uncertainty at the time discouraged many foreign companies from participating, even though they had initially shown interest. However, when Bonik Barta reached out to two multinational companies, they pointed to different reasons. They said the PSC terms offered by Petrobangla did not include any pricing incentives that would make it worthwhile for global oil and gas companies. They also said the available data did not convincingly show any strong potential for large reserves in Bangladesh’s offshore blocks.
Petrobangla and the Energy Division are now taking this lack of response very seriously. Before announcing the next round of international tenders, they are closely reviewing and updating the onshore PSC to make it more appealing. A special expert committee is evaluating how to make the terms more competitive. At the same time, Petrobangla will hold a series of meetings to finalize the share structure and pricing policy if gas is discovered.
When asked about the current status of onshore exploration, Energy Secretary Mohammad Saiful Islam told Bonik Barta, “We’re getting ready for onshore exploration, but we’re not going for a tender right away. There are several issues, including pricing, that need to be examined thoroughly. We’ll review relevant studies and prepare accordingly. We don’t want a repeat of the offshore bidding experience.” On whether any single company might be awarded a contract directly, he added, “There’s no chance of that. It’ll be done through a competitive tender, and only qualified companies will be selected.”
The onshore PSC hasn’t been updated since 1997. On December 22 last year, the government appointed Wood Mackenzie to revise it—marking the first update in 27 years.
According to Petrobangla sources, there are 22 onshore blocks in the country. Of these, 11 have never been explored. The untouched blocks include: 1, 2A, 2B, 3A, 4A, 4B, 5, 6A, 22A, 22B, and 23. Petrobangla is now working on a model that would allow capable foreign companies to form joint ventures and bid for these areas. At the same time, it is also planning to raise the price of gas from these new onshore blocks to attract serious investors.