OVL, OIL pull out of two Bangladesh oil blocks after Petrobangla invokes guarantees
The two companies, in consortium with Bangladesh Petroleum Exploration & Production Company (BAPEX), had jointly bid for shallow offshore blocks SS-04 and SS-09. OVL and OIL each held a 45% participating interest, with BAPEX owning the remaining 10%
Indian state-run explorers ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) have exited two offshore oil and gas blocks in Bangladesh following the invocation of performance bank guarantees by Petrobangla.
According to a report by The Hindu Businessline, the decision comes amid a sharp deterioration in diplomatic and trade relations between India and Bangladesh since the ouster of former Prime Minister Sheikh Hasina last year after mass student-led protests.
The two companies, in consortium with Bangladesh Petroleum Exploration & Production Company (BAPEX), had jointly bid for shallow offshore blocks SS-04 and SS-09. OVL and OIL each held a 45% participating interest, with BAPEX owning the remaining 10%.
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OIL, in its Q1 FY26 results filing on Tuesday, said it has decided to exit the projects, making a provision of ₹307.43 crore towards impairment of wells, other assets, and unfinished work programmes.
The company's management confirmed during an investor call on Wednesday that the withdrawal is in coordination with OVL.
In a separate filing, ONGC stated, "In respect of subsidiary OVL, on February 14, 2025, Petrobangla invoked bank guarantee (BG) of $16.4 million and $16.7 million for Block SS-04 and Block SS-09, Bangladesh, respectively. The board of OVL, on 27 June 2025, approved termination of production sharing contracts (PSCs) for blocks SS-04 and SS-09, Bangladesh."
With the guarantees already invoked against the consortium's minimum work obligations, OVL booked charges of ₹140 crore ($16.4 million) for SS-04 and ₹143 crore ($16.7 million) for SS-09 in its Q1 FY26 accounts.
In its FY24 annual report, ONGC had already recognised impairments of around ₹31 crore for the Bangladesh blocks, citing uncertainty over commercial discoveries.
The PSCs, signed in Dhaka on 17 February 2014, covered a total area of 14,295 sq km, with the exploration period running until 16 February 2025. Seismic surveys had been completed and one onshore well, Kanchan-1X in SS-04, was drilled. Plans to drill two offshore wells, one in each block, remained pending.
Bilateral tensions have spilled over into trade, with India in May 2025 restricting imports of several Bangladeshi products including garments, canned juices, food items, and cotton textiles. This followed Bangladesh's earlier ban on Indian yarn exports through land ports.
