Multinational interest surges in Bay of Bengal oil and gas exploration


Bangladesh is witnessing a surge of multinational interest in its untapped oil and gas reserves in the Bay of Bengal. As Petrobangla, the national oil company of Bangladesh, prepares for crucial meetings with several multinational companies, the potential for significant foreign investment in the region’s energy sector is becoming increasingly apparent. This article explores the latest developments, including upcoming bilateral meetings, multinational interest, and the strategic steps Bangladesh is taking to attract investment.

Zanendra Nath Sarker, the Chairman of Petrobangla, has announced that several bilateral meetings with multinational companies will take place before Eid. These meetings are part of Petrobangla’s strategic efforts to attract foreign investment in oil and gas exploration in the Bay of Bengal. Chairman of Petrobangla stated, “We are taking preparations for bilateral meetings with a couple of companies before Eid. Additionally, we are considering extending the tender submission deadlines for some companies”.

These meetings aim to finalize negotiations and foster collaboration with international energy giants. Among the potential participants is Chevron, a major US-based oil company. According to Petrobangla officials, a meeting with Chevron is likely to be the first in this series of discussions.

The Japan Energy Summit held in Tokyo on June 4th provided further insights into the growing interest of multinational companies in Bangladesh’s offshore oil and gas sector. During the summit, Haley Fam, Vice President of Business Development for ExxonMobil Asia Pacific, expressed keen interest in collaborating with Bangladesh for oil and gas exploration in the Bay of Bengal. Although she did not comment on whether ExxonMobil had purchased the tender documents, her remarks underscored the ongoing discussions between the company and the Bangladeshi government.

Bangladesh has divided its maritime territory into 26 blocks, comprising 15 deep-sea and 11 shallow-sea blocks. Currently, India’s Oil and Natural Gas Corporation (ONGC) is conducting exploration activities in two shallow-sea blocks. The remaining 24 blocks are open for tender, with the deadline for submissions extended until September 9, 2024. This extension is aimed at accommodating the interests of multinational companies and ensuring comprehensive participation in the tender process.

Petrobangla’s proactive approach includes inviting over 55 top-tier companies from around the world to participate in the tender. Following the resolution of maritime boundary disputes, Bangladesh has established ownership over 118,813 square kilometers of sea territory, creating a conducive environment for exploration and investment.

To attract multinational companies, Petrobangla has introduced an attractive Production Sharing Contract (PSC) model. Unlike previous PSCs, where gas prices were fixed, the new model ties gas prices to the international Brent crude market. The gas price per thousand cubic feet is set at 10 percent of the Brent crude price. This represents a significant shift from the earlier fixed rates of US$5.6 and US$7.25 per thousand cubic feet for shallow and deep-sea blocks, respectively.

The new PSC model, implemented in 2019, aims to ensure a balanced growth ratio between gas production and revenue sharing. Under this model, Bangladesh’s share of gas production will range from 35 to 60 percent in deep-sea blocks and 40 to 65 percent in shallow-sea blocks, depending on production levels. This flexible approach aims to attract multinational companies while ensuring a fair share of resources for Bangladesh.

On May 8, 2024, Petrobangla hosted an international seminar on the new PSC model, which was attended by over 15 multinational companies. The seminar provided a platform for in-depth discussions on investment opportunities and the potential of Bangladesh’s offshore oil and gas sector. During the seminar, Nasrul Hamid, the State Minister for Power, Energy, and Mineral Resources, highlighted the significant interest shown by international companies in exploring Bangladesh’s maritime resources.

Dr. Tawfiq-e-Elahi Chowdhury, the Prime Minister’s Advisor for Power, Energy, and Mineral Resources, emphasized the rich potential of Bangladesh’s maritime area. He stated, “Our sea area is a resource-rich region. The multi-client survey data indicates significant potential. If we can provide a favorable investment climate, we can attract substantial investment”.

Bangladesh is on the cusp of a major transformation in its energy sector, with multinational companies showing heightened interest in exploring the Bay of Bengal’s oil and gas reserves. Petrobangla’s strategic initiatives, including bilateral meetings, attractive PSC models, and proactive engagement with international stakeholders, are positioning Bangladesh as a promising destination for energy investments.

As the country prepares for crucial discussions with Chevron and other multinational companies, the prospects for unlocking the vast potential of the Bay of Bengal’s resources are becoming increasingly tangible. With a favorable investment climate and strategic partnerships, Bangladesh is poised to harness its maritime wealth and drive economic growth in the coming years.

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