After more than a decade of underwhelming progress, Bangladesh has officially terminated agreements with two Indian state-run companies exploring oil and gas in the Bay of Bengal. Petrobangla, the state-owned energy corporation, has withdrawn the performance bank guarantees of ONGC Videsh Limited (OVL) and Oil India Limited (OIL), prompting the firms to exit from two offshore blocks.

The Indian companies had been engaged in shallow water blocks SS-04 and SS-09 since 2012, covering a total area of 14,295 square kilometers. Despite repeated extensions and pledges, the firms failed to make any significant discoveries, leaving Bangladesh without tangible benefits from the venture.

Earlier this month, OIL disclosed in its 2024 annual report that both companies had decided to withdraw from Bangladesh, setting aside provisions worth 30.7 billion rupees (approximately USD 370 million) for incomplete works and related obligations. On August 12, the firms also reported their exit to the Bombay Stock Exchange.

Energy experts in Dhaka have long criticized the contract terms signed during the Sheikh Hasina era, which gave Bangladesh only a 10% share of any discovered reserves, while the Indian side was set to control 90%. Critics argue that this deal disproportionately favored India, allowing the companies to hold on to strategic offshore blocks without delivering results.

For years, the companies extended their presence by promising future prospects, but with no substantial progress, Petrobangla declined to renew the contracts further. By reclaiming the blocks, Bangladesh has now opened the door to either re-tender them to new international bidders or develop them under state-led initiatives.

Analysts see the move as an assertion of Bangladesh’s energy sovereignty. “It was unacceptable that prime offshore blocks remained in foreign hands for over a decade without results,” said one Dhaka-based energy researcher. “This decision restores Bangladesh’s control over its own resources.”

With domestic gas reserves depleting and energy import bills rising, Bangladesh is expected to accelerate efforts to attract new exploration partners under more balanced terms.

BOB Post