In March 2012, the International Tribunal for the Law of the Sea ruled in Bangladesh’s favour against Myanmar, settling a maritime boundary dispute that had dragged on for decades. Two years later, a Permanent Court of Arbitration tribunal resolved another longstanding maritime boundary dispute with India. Together, the two rulings granted Bangladesh an additional 118,813 square kilometres of sea, resulting in a total maritime area larger than the country’s entire land mass. Dhaka redrew its offshore map into 26 exploration blocks optimistically. One of the world’s largest underexplored sedimentary basins had just opened up.
That optimism has not aged well. No commercially viable offshore production has begun. Three of the four international companies that signed Production Sharing Contracts have since pulled out of the Bay, and Bangladesh’s 2024 bidding round, the first in over a decade, drew no bids at all. The problem facing Bangladesh is no longer how to win maritime territory. It is how to do something useful with it.
Energy Insecurity
Domestic gas output has fallen to its lowest point in a decade, dropping from around 2,700 million cubic feet per day (mmcfd) in 2017 to roughly 1,800 mmcfd by mid-2025, while the demand has pushed past 4,000 mmcfd. That leaves a daily shortfall of more than 1,100 mmcfd with no clear path to closing it. Of the country’s estimated recoverable reserves, over 22 of 28.79 trillion cubic feet have already been used up, leaving about a decade’s worth at current consumption rates.
To meet demands, Bangladesh has been buying LNG on international markets, spending nearly $17.6 billion between 2018 and mid-2025. The bill grew to $3.88 billion in 2025 alone, up from $3.02 billion the year before, with a rising share bought on volatile spot markets where Bangladesh has little pricing leverage. The IMF has flagged the sector’s swelling financial demands as a top macroeconomic risk, and foreign oil and gas now eat up nearly sixty cents of every dollar in the country’s trade deficit. What started as an energy supply problem has quietly become a foreign exchange crisis.
Prospects in the Bay of bengal
The Bengal Fan, the world’s largest deep-water sedimentary fan, sits beneath Bangladesh’s EEZ. The geological indicators are positive, and the surrounding region offers a useful read: India’s Krishna-Godavari basin to the west and Myanmar’s Rakhine basin to the east have both delivered major commercial finds. The Rakhine basin shares the same geological formations as Bangladesh’s own blocks and has been in active production for over a decade. Professor Badrul Imam of Dhaka University has made the straightforward point that gas does not stop at a maritime boundary, if it exists on both sides of Bangladesh’s EEZ limits, there is every reason to expect it exists within Bangladesh’s EEZ as well. The catch is that around 90 percent of Bangladesh’s offshore blocks have never been drilled, so nobody actually knows.
The economics would shift significantly if they did find gas. Domestic production would cut reliance on spot LNG and supply industry at roughly one-eighteenth the per-unit cost of imports. Even a moderate discovery would change the country’s energy equation. The problem is not the geology. It is the failure to test it.
The Bay of Bengal has become one of the more strategically significant stretches of water in the Indo-Pacific, sitting adjacent to the Strait of Malacca and linking South and Southeast Asia. Major powers have not been idle to this fact. China’s CNPC has built a 793-kilometre pipeline from Myanmar’s Rakhine coast to Yunnan province, giving Beijing an overland energy route from the Indian Ocean that skips the Malacca bottleneck entirely. Sinopec and CNOOC have signalled interest in Bangladesh’s offshore blocks. India, watching Chinese influence spread around its coastline, has stepped up its naval presence and offshore investment across the eastern Indian Ocean. Japan is funding a deep-sea port at Matarbari through its Bay of Bengal Industrial Growth Belt initiative, and the United States is pursuing port investment through the Quad’s Ports of the Future Partnership. Who gets to develop Bangladesh’s offshore blocks is not just an energy question.
2024 Bidding Round
The 2024 Offshore Bidding Round was Bangladesh’s first since 2012. Seven companies bought tender documents. Not one submitted a bid. The reasons were not hard to find. Companies were uneasy about untested cost recovery and profit-sharing provisions in the PSC, put off by a gas pricing formula pegged to Brent crude with no floor price, and rattled by the political upheaval following August 2024. A review afterwards found that several multinationals simply did not trust Petrobangla’s reserve data enough to commit. That last point is particularly damaging, because data credibility is the kind of thing that takes years to rebuild.
Bangladesh has now revised its PSC three times in seven years. The latest, PSC 2026, received in-principle approval just weeks before this article’s publication. Each iteration has been presented as a solution that will bring investors back; none has done so yet. That is because contract terms are only one part of what an IOC weighs before committing to a decade-long, billion-dollar deepwater project. Political continuity, regulatory reliability, and the quality of available geological data all matter just as much. Bangladesh’s offshore problem is not primarily a contractual one.
Governance Structure
Petrobangla currently functions as commercial operator, contract manager, and upstream regulator all at once. That arrangement suits nobody. It creates accountability gaps and conflicts of interest that deters international investors. The Bangladesh Energy Regulatory Commission was set up as an independent check on energy pricing and licensing, but successive government amendments have allowed ministerial intervention in pricing decisions, hollowing out the independence it was supposed to have. Decision-making remains tightly centralised, with state-owned corporations operating in silos and no body overseeing the sector as a whole.
Professor Badrul Imam has described Bangladesh’s energy policies as “outdated, fragmented and disconnected from today’s realities”, a verdict that is difficult to dispute given the record. There have been some calls to restructure Petrobangla and BAPEX from scratch, and the Brill study on the failed 2024 round specifically recommended creating an independent regulatory body with the authority to enforce contracts without political interference. That recommendation has not yet been acted on.
Readiness Gaps: Capacity, Infrastructure, and Weather
BAPEX, Bangladesh’s state drilling agency, has no offshore drilling experience at all. India’s ONGC, operating in the adjacent Krishna-Godavari basin at depths of 300 to 3,200 metres, took years of sustained investment to reach that capability. Bangladesh also has no coastal supply bases, no specialised port infrastructure for deepwater operations, and no pipeline network to bring offshore gas ashore. These are not minor shortcomings. They are preconditions that have to be in place before production can ever start.
The Bay of Bengal’s weather adds another layer of risk. It generates a disproportionate share of the world’s worst storm surges, and Cyclone Mocha in 2023 demonstrated the practical implication: both of Bangladesh’s floating LNG storage units were taken offline, cutting the country’s gas supply by more than 23 percent. Fixed offshore platforms would face the same exposure, with fewer options for rapid shutdown. Bangladesh has not yet produced an emergency response framework for offshore operations that reflects this reality.
On security, the Bay’s exposure to maritime terrorism and non-state actors is well documented, and the U.S. GAO has identified serious and growing cybersecurity vulnerabilities in offshore oil and gas infrastructure globally. Bangladesh’s Coast Guard Goal 2030 and Navy Forces Goal 2030 programmes are heading in the right direction, but both remain works in progress. Offshore energy cannot be planned in isolation from the security environment it will operate in.
What Needs to Change
Deepwater projects run on decade-long timelines. A company deciding whether to bid needs reasonable confidence that the contract it signs today will still be honoured by whoever is in government ten years from now. Bangladesh cannot offer that confidence yet, and another round of PSC revisions will not by itself fix that. What is actually needed is a proper offshore governance structure: an independent regulatory authority with a clear statutory mandate, a regular tendering cycle that gives investors planning predictability, a sustained seismic data programme to reduce exploration risk upfront, and a national energy strategy that places offshore gas at the centre and holds across governments.
The Energy and Power Sector Master Plan 2026-2050 nominally does this, but experts have flagged the lack of public consultation and independent scrutiny, the same institutional shortcuts that have cost Bangladesh credibility with investors before. The now withdrawn Maheshkhali Integrated Development Authority Ordinance 2025 was a useful step on port governance, but even that needed to sit within a broader framework that explicitly covers offshore energy assets. Supply bases, logistics infrastructure, and pipeline connections all need to be planned now, not built in a rush after a discovery is made. Bangladesh should also be actively managing which partners take equity stakes in its blocks, spreading participation across Western majors, Asian national oil companies, and multilateral institutions rather than ending up dependent on whoever happens to show interest.
Conclusion
Bangladesh spent the better part of a decade fighting for its maritime boundaries and won. It has now spent another decade largely failing to capitalise on them. The legal victories of 2012 and 2014 were real, but sovereignty over a sedimentary basin is worth very little without the institutional capacity to develop it. The country is running down its onshore reserves, spending billions on imported LNG it cannot comfortably afford, and sitting on offshore acreage that remains almost entirely undrilled. That is not bad luck. It is the accumulated result of deferred decisions, fragmented governance, and a tendency to treat each new PSC revision as a substitute for the harder structural work.
None of this is irreversible. Other countries have rebuilt offshore regulatory credibility after false starts, attracted serious investment into frontier basins, and developed the technical capacity to operate in deep water. Bangladesh has the geological upside, the strategic location, and enough institutional knowledge to build on. What has been missing is the political will to treat offshore energy as a genuine national priority rather than a recurring licensing exercise. The interim government’s tenure showed little sign of that changing. Whether the current administration sees it differently will matter more than any contract revision.