Reasons of No IOC Participation in Offshore Bid Bangladesh

 

Drawbacks and Challenges of No IOC Participation in Offshore Bid Bangladesh

PetroBangla invited Bids for acreages of Oil and Gas exploration in offshore blocks of Bangladesh. Bid submission time expired on 9 Dec’2024, very unfortunate that No One IOC has been participated in this International Bid and shame for Energy Resources Division as well as for the Nation, means where it has been taken the standard of Energy sector at Global level. The Drawbacks and Challenges are

1.                   Limited Geological Data

The lack of comprehensive and high-quality geological and seismic data on offshore reserves can deter potential Bidders. Companies are hesitant to invest in areas where the resource potential is uncertain. This limits competition and result is no participation or bids from major international players. It also proves that MultiClient seismic data is not authentic to IOC as the exploration work is very costly & risky and is matter of huge investment. 

Offshore Block

Suggestion: Improve Geological Data by own Investment in acquiring and sharing high-quality seismic data. It would be better to add clause in PSC that the seismic  acquisition will be by the IOC itself, at which there will be no confusion on data  authentication or data piracy, huge investment could not be depending on imported data from other third party source. 

2.                 2.                Lack of Local Expertise and Dealing with IOC Management

Bangladesh is currently lack of sufficient local expertise and technology for offshore   exploration and development, requiring reliance on foreign companies. Total energy  sector is collapsed due to lack of local expertise personnel, for dealing foreign IOC  management look for the head to head experienced personnel as it would be easy for  them to explain and further proceedings. Unfortunately, Energy sector is controlled by the people whether they know the definition of hydrocarbon exploration or not, whereas the exploration experience is faraway. Besides the impact of impression on dealing of existing IOC contract with the local authorities of energy sector is also factor. Before arrival, the new company might collect information from the existing IOC Company on local status of dealing contract and infrastructure.  

Bureaucratic delays, unclear regulatory frameworks, and inconsistent enforcement of contracts can create uncertainties for international companies.

Suggestion: Develop local expertise to reduce reliance on foreign companies over time. Simplify processes and offer clear, investor-friendly policies.

3.                   Issue of Bid Security Bond

High amount of Bid Security Bond is also one of major issue for ignoring Bid. Bid Security Bond and Contract Performance Bond is not same, in bidding process it supposed to be at minimum level.

Suggestion: Bid Security Bond should reduce to minimum amount.

 4.                 Inadequate Infrastructure

Offshore exploration requires significant infrastructure, such as ports, pipelines, and processing facilities, which Bangladesh lacks in many areas. Investors may factor the additional cost of building infrastructure into their bids, reducing the economic attractiveness of the projects for Bangladesh.

Suggestion: Partner with international firms to co-develop infrastructure.

 5.                 Lack of Bidding Campaign Internationally and Regional Competition

Though the Bid was calling for investment from the International Oil Company but there was almost no campaign internationally, even in doubt whether have circulated any brochure on oil and gas exploration or energy scenario of Bangladesh through the existing Bangladeshi consulate all over the world or not, surprising. Without this, How do we expect huge investment in this under developed country? Should not expect over or not be on day dream, Reality is different. For having a large investment might invest some from own.

Countries like India and Myanmar, which also have offshore resources, often compete for the same pool of investors.

Suggestion: In future bidding, may arrange international seminar in various hydrocarbon exploration hub like Singapore/Malaysia, UAE, England and Houston, USA. As if, may have the participation of giant oil company and feel attraction to Bangladesh. Bangladesh needs to offer terms that are significantly more attractive to stand out in this competitive landscape.

6.                   Environmental and Social Concerns

Offshore drilling poses environmental risks, including potential oil spills and marine ecosystem disruptions. Bangladesh's densely populated coastal areas increase the stakes. Environmental opposition and the need for stringent safeguards can delay projects and increase costs.

Suggestion: Ensure environmental and social considerations are addressed to attract ESG (environmental, social, and governance) -conscious investors.

7.             Energy Transition and Market Dynamics

The global shift toward renewable energy and decreasing interest in fossil fuels could reduce the long-term attractiveness of Bangladesh’s offshore hydrocarbon potential. Companies may be reluctant to invest heavily in oil and gas when the industry is facing increasing pressure to decarbonize.

Suggestion: Make PSC more competitive and flexible.

By addressing these challenges strategically, Bangladesh can improve its attractiveness for offshore oil and gas exploration while ensuring sustainable development. Bangladesh should consider the priority of offshore exploration as needed substitutes to meet present demand of natural gas. Despite the increasing emphasis on renewable energy and climate change mitigation, hydrocarbons continue to play a central role in sustaining global economic growth. In this circumstances discovery of hydrocarbon in large offshore area can help Bangladesh to get rid of from huge expenditure of importing petroleum and possess Bangladesh into development track.