Pacific Money | Economy | South Asia

The Bay of Bengal’s Energy Scramble Has Begun – But Bangladesh Is Late to the Party 

Bangladesh won its maritime boundary a decade ago and has barely drilled a single well.

Bangladesh is running out of gas. Domestic production has fallen from 2,423 million cubic feet per day (mmcfd) in fiscal year (FY) 2020 to around 2,049 mmcfd by FY2024 — a decline driven by aging fields and decades of under-investment in exploration. Demand, meanwhile, has soared past 3,900 mmcfd.

Of the country’s 29 known gas fields, most are declining. Bibiyana, Bangladesh’s flagship gas field, dropped from 1,223 mmcfd in FY2020 to around 1,032 mmcfd by FY2024. BAPEX projected that without significant new finds, reserves could be exhausted by 2039 – or sooner. Bangladesh once enjoyed a gas surplus; now it imports liquefied natural gas through two floating terminals at Moheshkhali. The country spent over 407 billion taka (around $3.3 billion) on LNG in FY2024–25 alone.

What makes this crisis acutely frustrating is that Bangladesh has other supplies to exploit. In 2012, the International Tribunal for the Law of the Sea awarded Bangladesh a favourable maritime boundary verdict against Myanmar. In 2014, a second ruling went Bangladesh’s way against India. The combined outcome: Bangladesh gained sovereign rights over 118,813 square kilometers of the Bay of Bengal – an exclusive economic zone larger than the country’s entire land area, sitting atop one of the world’s largest underexplored sedimentary basins. 

Bangladesh then spent a decade doing almost nothing with that windfall. Some shallow-water Production Sharing Contracts (PSCs) were sealed, and a new multi-client seismic campaign was completed in 2023 – but these are preparations. Production never actually started. 

The choice to prioritize LNG imports over sustained offshore investment might have made sense back in 2018, when global gas prices were low and LNG offered speed and flexibility. But, as the Iran war and resulting energy crisis proved, dependence on LNG imports is dangerous.

The contrast with Bangladesh’s neighbors is sharp. On January 7, 2024, India’s ONGC achieved the first oil from its flagship deepwater KG-DWN-98/2 block in the Krishna Godavari basin – a project projected to increase India’s domestic oil production by 11 percent and gas by 15 percent at peak, producing 45,000 barrels per day. The KG basin lies directly along Bangladesh’s western maritime boundary. 

India’s deepwater investment has been years in the making, financed by a state company with the scale and technical depth to drill in 300 to 3,200 meters of water. Bangladesh’s equivalent agency, BAPEX, has no offshore drilling experience.

To Bangladesh’s east, Myanmar’s Rakhine basin holds significant proven reserves and has been the center of Chinese energy strategy in the Bay of Bengal for over a decade. CNPC constructed a 793-kilometer gas pipeline from Kyaukpyu on the Rakhine coast to China’s Yunnan province at a cost of $2 billion. Commissioned in 2013, the pipeline gives Beijing a direct overland energy route from the Indian Ocean that bypasses the Malacca Strait. When Bangladesh faced a naval standoff with Myanmar in 2008 over disputed EEZ exploration activities, it turned not to India but to China to exert diplomatic pressure on Naypyidaw – an early sign of how Beijing had positioned itself as the region’s indispensable energy broker.

Myanmar’s military coup in 2021 and subsequent civil war have disrupted its gas sector, with most Western operators withdrawing. The junta has sought new international investment but sanctions exposure and instability have deterred credible players. China remains the exception. CNPC’s pipeline continues to operate. The chaos in Myanmar has only deepened Naypyidaw’s dependence on Chinese patronage.

The Bengal Fan – the world’s largest deep-water sedimentary fan – underlies Bangladesh’s offshore EEZ. Gas has been found to its west in India’s KG and Mahanadi basins, and to its east in Myanmar’s Rakhine basin. As Professor Badrul Imam of Dhaka University argued, if gas exists in the same geological formation on both sides of Bangladesh’s EEZ boundaries — and it does — there is high geological probability that it exists within Bangladesh’s own blocks. 

The Bengal Fan’s deep-water fold belt shows structural similarities to the Gulf of Mexico and Niger Delta, regions that have proven to be major hydrocarbon provinces. TGS, which conducted the most recent multi-client 2D seismic survey, described the Bengal Fan as one of the most extensively underexplored frontier regions in the world with significant evidence of working petroleum systems.

Yet compared to its neighbors, Bangladesh is left playing catch-up. It launched a new Offshore Bidding Round in March 2024 – the first such tender in eight years. Bangladesh was offering 24 blocks across approximately 93,000 square kilometers under a revised Production Sharing Contract designed to be genuinely competitive: no signature bonus, no royalty, full profit repatriation, and gas prices indexed to Brent crude. Around 15 international oil companies took part, including ExxonMobil, Chevron, and CNOOC. ExxonMobil had separately approached Petrobangla as early as 2023 with a proposal to invest between $10 billion and $30 billion across deep-water blocks – the largest unsolicited expression of interest Bangladesh had ever received from a Western major.

And yet the bidding round has not produced contracts. Instead, the original deadline was extended by 14 months amid the political turmoil that followed the ouster of Sheikh Hasina in August 2024. Investors were clearly uncertain about political continuity and the durability of any PSC signed during a transition period. Deep-water exploration requires a decade-long horizon. Companies need confidence that the government signing their contract will honor it – even after a political transition. The return of an elected government after the Bangladesh Nationalist Party’s landslide victory in February 2026 could signal a more predictable policy environment – but only if it is followed by clear contractual protections and a credible long-term energy strategy that survives political cycles.

The new BNP government inherited a situation where the easy choices have already been foreclosed. The Awami League chose LNG imports over offshore investment for over a decade, creating a long-term dependency that its successor now has to manage. Every year of delay compounds the structural cost. Bangladesh spent over 407 billion takas on LNG in FY2024–25 – paying roughly 18 times more per unit than it would for domestically produced gas. 

Even if offshore exploration begins in earnest tomorrow, first gas from deep-water discoveries is at minimum a decade away. Bangladesh’s industrial base – already under pressure from power shortages, U.S. tariff disruption, and competition from Vietnam and Cambodia in garment manufacturing – cannot wait that long for affordable domestic supply. The window for offshore exploration to meaningfully contribute to energy security is narrowing.

Amid Bangladesh’s offshore delay, the geopolitical stakes are sharpening. China’s Sinopec has publicly expressed interest in Bangladesh’s offshore bidding round; CNOOC representatives attended the 2024 promotional seminar. For Bangladesh, Chinese participation offers capital and technical capacity that domestic institutions lack. But if Chinese state-owned oil majors come to dominate both equity and infrastructure, as CNPC does in Myanmar through the Kyaukpyu pipeline, Beijing gains leverage of a different order than if it is simply one partner among several. 

Bangladesh’s new BNP government, which has historically maintained closer ties to the West and to multilateral institutions, faces an early test: whether it can attract sufficient Western oil company investment to ensure that any Chinese participation remains one element of a diversified portfolio, rather than a default by necessity.

If the latest bidding round attracts credible Western oil companies, Bangladesh will gain technical expertise, capital, and a counterweight to China’s energy influence in the bay. If it defaults to Chinese national oil companies because no one else bids, Bangladesh forfeits strategic flexibility.

The scramble for the Bay of Bengal is well underway. India is extracting. Myanmar, though in chaos, is still embedded in Beijing’s energy architecture, headlined by a gas pipeline. Yet Bangladesh’s 118,000 square kilometers of maritime EEZ, above a geological formation its own experts describe as almost certainly gas-bearing, sit largely undrilled. Bangladesh is falling behind – and time will tell if it can still shape the terms of its participation.

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Bangladesh is running out of gas. Domestic production has fallen from 2,423 million cubic feet per day (mmcfd) in fiscal year (FY) 2020 to around 2,049 mmcfd by FY2024 — a decline driven by aging fields and decades of under-investment in exploration. Demand, meanwhile, has soared past 3,900 mmcfd.

Of the country’s 29 known gas fields, most are declining. Bibiyana, Bangladesh’s flagship gas field, dropped from 1,223 mmcfd in FY2020 to around 1,032 mmcfd by FY2024. BAPEX projected that without significant new finds, reserves could be exhausted by 2039 – or sooner. Bangladesh once enjoyed a gas surplus; now it imports liquefied natural gas through two floating terminals at Moheshkhali. The country spent over 407 billion taka (around $3.3 billion) on LNG in FY2024–25 alone.

What makes this crisis acutely frustrating is that Bangladesh has other supplies to exploit. In 2012, the International Tribunal for the Law of the Sea awarded Bangladesh a favourable maritime boundary verdict against Myanmar. In 2014, a second ruling went Bangladesh’s way against India. The combined outcome: Bangladesh gained sovereign rights over 118,813 square kilometers of the Bay of Bengal – an exclusive economic zone larger than the country’s entire land area, sitting atop one of the world’s largest underexplored sedimentary basins. 

Bangladesh then spent a decade doing almost nothing with that windfall. Some shallow-water Production Sharing Contracts (PSCs) were sealed, and a new multi-client seismic campaign was completed in 2023 – but these are preparations. Production never actually started. 

The choice to prioritize LNG imports over sustained offshore investment might have made sense back in 2018, when global gas prices were low and LNG offered speed and flexibility. But, as the Iran war and resulting energy crisis proved, dependence on LNG imports is dangerous.

The contrast with Bangladesh’s neighbors is sharp. On January 7, 2024, India’s ONGC achieved the first oil from its flagship deepwater KG-DWN-98/2 block in the Krishna Godavari basin – a project projected to increase India’s domestic oil production by 11 percent and gas by 15 percent at peak, producing 45,000 barrels per day. The KG basin lies directly along Bangladesh’s western maritime boundary. 

India’s deepwater investment has been years in the making, financed by a state company with the scale and technical depth to drill in 300 to 3,200 meters of water. Bangladesh’s equivalent agency, BAPEX, has no offshore drilling experience.

To Bangladesh’s east, Myanmar’s Rakhine basin holds significant proven reserves and has been the center of Chinese energy strategy in the Bay of Bengal for over a decade. CNPC constructed a 793-kilometer gas pipeline from Kyaukpyu on the Rakhine coast to China’s Yunnan province at a cost of $2 billion. Commissioned in 2013, the pipeline gives Beijing a direct overland energy route from the Indian Ocean that bypasses the Malacca Strait. When Bangladesh faced a naval standoff with Myanmar in 2008 over disputed EEZ exploration activities, it turned not to India but to China to exert diplomatic pressure on Naypyidaw – an early sign of how Beijing had positioned itself as the region’s indispensable energy broker.

Myanmar’s military coup in 2021 and subsequent civil war have disrupted its gas sector, with most Western operators withdrawing. The junta has sought new international investment but sanctions exposure and instability have deterred credible players. China remains the exception. CNPC’s pipeline continues to operate. The chaos in Myanmar has only deepened Naypyidaw’s dependence on Chinese patronage.

The Bengal Fan – the world’s largest deep-water sedimentary fan – underlies Bangladesh’s offshore EEZ. Gas has been found to its west in India’s KG and Mahanadi basins, and to its east in Myanmar’s Rakhine basin. As Professor Badrul Imam of Dhaka University argued, if gas exists in the same geological formation on both sides of Bangladesh’s EEZ boundaries — and it does — there is high geological probability that it exists within Bangladesh’s own blocks. 

The Bengal Fan’s deep-water fold belt shows structural similarities to the Gulf of Mexico and Niger Delta, regions that have proven to be major hydrocarbon provinces. TGS, which conducted the most recent multi-client 2D seismic survey, described the Bengal Fan as one of the most extensively underexplored frontier regions in the world with significant evidence of working petroleum systems.

Yet compared to its neighbors, Bangladesh is left playing catch-up. It launched a new Offshore Bidding Round in March 2024 – the first such tender in eight years. Bangladesh was offering 24 blocks across approximately 93,000 square kilometers under a revised Production Sharing Contract designed to be genuinely competitive: no signature bonus, no royalty, full profit repatriation, and gas prices indexed to Brent crude. Around 15 international oil companies took part, including ExxonMobil, Chevron, and CNOOC. ExxonMobil had separately approached Petrobangla as early as 2023 with a proposal to invest between $10 billion and $30 billion across deep-water blocks – the largest unsolicited expression of interest Bangladesh had ever received from a Western major.

And yet the bidding round has not produced contracts. Instead, the original deadline was extended by 14 months amid the political turmoil that followed the ouster of Sheikh Hasina in August 2024. Investors were clearly uncertain about political continuity and the durability of any PSC signed during a transition period. Deep-water exploration requires a decade-long horizon. Companies need confidence that the government signing their contract will honor it – even after a political transition. The return of an elected government after the Bangladesh Nationalist Party’s landslide victory in February 2026 could signal a more predictable policy environment – but only if it is followed by clear contractual protections and a credible long-term energy strategy that survives political cycles.

The new BNP government inherited a situation where the easy choices have already been foreclosed. The Awami League chose LNG imports over offshore investment for over a decade, creating a long-term dependency that its successor now has to manage. Every year of delay compounds the structural cost. Bangladesh spent over 407 billion takas on LNG in FY2024–25 – paying roughly 18 times more per unit than it would for domestically produced gas. 

Even if offshore exploration begins in earnest tomorrow, first gas from deep-water discoveries is at minimum a decade away. Bangladesh’s industrial base – already under pressure from power shortages, U.S. tariff disruption, and competition from Vietnam and Cambodia in garment manufacturing – cannot wait that long for affordable domestic supply. The window for offshore exploration to meaningfully contribute to energy security is narrowing.

Amid Bangladesh’s offshore delay, the geopolitical stakes are sharpening. China’s Sinopec has publicly expressed interest in Bangladesh’s offshore bidding round; CNOOC representatives attended the 2024 promotional seminar. For Bangladesh, Chinese participation offers capital and technical capacity that domestic institutions lack. But if Chinese state-owned oil majors come to dominate both equity and infrastructure, as CNPC does in Myanmar through the Kyaukpyu pipeline, Beijing gains leverage of a different order than if it is simply one partner among several. 

Bangladesh’s new BNP government, which has historically maintained closer ties to the West and to multilateral institutions, faces an early test: whether it can attract sufficient Western oil company investment to ensure that any Chinese participation remains one element of a diversified portfolio, rather than a default by necessity.

If the latest bidding round attracts credible Western oil companies, Bangladesh will gain technical expertise, capital, and a counterweight to China’s energy influence in the bay. If it defaults to Chinese national oil companies because no one else bids, Bangladesh forfeits strategic flexibility.

The scramble for the Bay of Bengal is well underway. India is extracting. Myanmar, though in chaos, is still embedded in Beijing’s energy architecture, headlined by a gas pipeline. Yet Bangladesh’s 118,000 square kilometers of maritime EEZ, above a geological formation its own experts describe as almost certainly gas-bearing, sit largely undrilled. Bangladesh is falling behind – and time will tell if it can still shape the terms of its participation.

Mezabahnur Masum is a journalist and executive editor of Dallas Barta, a Bangla-language newspaper serving the Bangladeshi diaspora in Dallas–Fort Worth. He writes features for the Dallas Observer and holds graduate degrees in Geography and Environment from the University of Dhaka and in Journalism from the University of North Texas. He is a recipient of the AEJMC Gene Burd Urban Journalism Research Award.

Bangladesh energy security

Bangladesh LNG imports

Bangladesh LNG production

Bangladesh offshore drilling

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