In an effort to increase Bangladesh’s declining domestic gas production in the face of skyrocketing demand across industries and power plants, state-run Petrobangla is preparing to begin a long-awaited onshore bidding round ahead of an offshore one.

Petrobangla chairman Md Rezanur Rahman told The Financial Express, “We are now focusing on calling an international tender to carry out oil and gas exploration in onshore gas blocks, especially in hilly areas.”
“We are eager to release the onshore gas block tender as soon as possible. The offshore gas block bidding process will take place later, he stated.

After almost 28 years without such a bidding process, Petrobangla is now again concentrating on onshore exploration. According to industry sources, onshore fields are now a more feasible first step due to reduced investment requirements, faster exploration timetables, and significant data gaps in offshore areas.

A draft of the Model Production Sharing Contract (MPSC) for the forthcoming onshore tender is presently being reviewed by the Energy and Mineral Resources Division (EMRD). In order to make terms more enticing to international oil corporations (IOCs), Petrobangla incorporated suggestions from worldwide consultancy Wood Mackenzie into the draft that it created and presented for approval.

Although the number of blocks and pricing details remain undisclosed, officials said the new pricing formula will link the gas purchase price to around 8% of the dated Brent crude on a rolling three-month average, with a cap. Based on the current Brent price of US$65 per tonne, gas from new onshore contracts is expected to cost around $5.0 per MMBtu—roughly half the price of spot LNG imports and significantly cheaper than long-term LNG supplies.

Bangladesh currently pays about $11 per MMBtu for spot LNG and $7.5 per MMBtu under long-term contracts. In contrast, existing PSC holders receive far less—Chevron earns around $2.76 per MMBtu and KrisEnergy around $2.31 per MMBtu, based on older HSFO-linked terms.

Petrobangla also buys gas from its state-owned entities: SGFL and BGFCL at Tk 28 per Mcf, and BAPEX at Tk 112 per Mcf.

The corporation is also working on a separate draft MPSC for an offshore bidding round, which will follow after the onshore tender. Its most recent offshore round, under the Model PSC 2023, received no bids from IOCs, underscoring the need for updated terms and improved geological data.

According to official data as of December 5, Bangladesh’s current gas supply is approximately 2,671 mmcfd, including 892 mmcfd of re-gasified LNG, versus a demand surpassing 4,000 mmcfd. To close the growing deficit, the government still imports LNG from RasGas in Qatar, Oman Trading International, and a number of spot providers.

Blocks 5, 7, 9, and 10 were awarded during the last onshore round in 1997. Currently, Chevron operates in onshore Blocks 12, 13, and 14, while four IOCs operate under PSCs in three shallow-water offshore blocks. Under Block 9, KrisEnergy operates out of the Bangora field.

The new onshore bidding round represents a major policy change as Bangladesh looks to secure more dependable and reasonably priced gas supply in light of diminishing domestic output and growing import costs.