On Sunday, the South Asian nation opened bidding to dozens of international companies, including ExxonMobil, Chevron, ConocoPhillips and China’s Sinopec, on 24 offshore blocks spread across 15 deep and nine shallow waters.

The bidding process, which ends an eight-year pause on exploration tenders, will be open for six months as Bangladesh grapples with energy shortages and struggles to pay for imported fuel and gas from its fast-shrinking dollar reserves.

The country faced a spike in fuel prices in the wake of Russia’s invasion of Ukraine, forcing it to turn to the International Monetary Fund last year for a $4.7 billion bailout.

Despite being seen as a promising source of natural gas, Bangladesh has long struggled with lagging exploration, with just 18 wells drilled in the past 12 years, according to state energy company PetroBangla. Just four new gas fields were discovered over that period.

Analysts said a key reason was international companies exiting Bangladesh over unfavorable terms in production-sharing contracts (PSCs), which set how the government and a company will share risks, costs and profits from tapping natural resources.

The American energy giant ConocoPhillips terminated a contract in 2015, citing unfavorable terms, and Australia’s Santos and Singapore’s KrisEnergy exited exploration projects in 2020 after incurring losses.

However, PetroBangla said new contracts will carry more favorable conditions.

“We have amended our last PSC, and the new contract model has attractive terms for the international companies,” Chairman Zanendra Nath Sarker told Nikkei Asia.

The new contracts will offer a revenue-sharing model, a 5% higher share of production and better pricing mechanisms, he added.

“I think it’s a win-win situation for both the parties,” Sarker said.

Revenue-sharing contracts could work out better for the country, which didn’t benefit from previous profit-sharing agreements, said Badrul Imam, a professor at the University of Dhaka’s geology department.

“[They] led to unfavorable outcomes for Bangladesh due to cost-recovery provisions,” he said. “This new PSC has already generated interest among many reputed companies. We need to understand that unless we tap the potential of our offshore gas reserves, we will face a severe energy crisis within the next 10 years.”

Bangladesh’s economic boom has been powered by natural gas, the main source of electricity generation for decades. But dwindling reserves from older fields and a growing reliance on imported LNG are making the country increasingly vulnerable to external factors affecting energy supply.

Over the past two decades, Bangladesh consumed about 13 trillion cubic feet (TCF) of gas, but only about 2 trillion cubic feet of new gas reserves were discovered over that period. The country’s existing gas reserves are likely to be exhausted by 2033 in the absence of new discoveries.

Bangladesh’s oil and gas exploration efforts in the Bay of Bengal also pale in comparison to neighboring India and Myanmar, which have both made frequent gas discoveries in the waterway.

The government’s hesitance to explore these potentially rich offshore reserves “hindered domestic production and favored private businesses involved in LNG imports,” Imam said.

Development of the energy sector has long lagged that of the power sector, said Shafiqul Alam, the lead energy analyst at the Institute for Energy Economics and Financial Analysis, a U.S.-based think tank.

Bangladesh “provided more attention on the power sector capacity expansion” but could not step up its “efforts on enhancing energy security,” Alam said.

Despite resolving maritime boundary disputes with Myanmar and India over the past decade, Bangladesh has yet to ramp up offshore gas exploration — even as Myanmar made promising discoveries bordering Bangladesh’s territory in the Bay of Bengal.

Niaz Asadullah, a professor of economics at Monash University Malaysia, said geopolitical considerations likely influenced the timeline of developments in Bangladesh’s energy sector.

“The incumbent government increasingly favored non-Western companies, particularly when it prepared for a third term in power,” Asadullah said, adding that the number of contracts awarded to the Russian state-owned company Gazprom for drilling gas wells had doubled in the past few years.

Meanwhile, Dhaka opened the door for more domestic power generation, transmission and distribution, awarding contracts worth at least $4.5 billion to private and state-run Indian companies.

In January, Bangladesh’s ruling Awami League and Prime Minister Sheikh Hasina won a fourth consecutive term.

“With the national election concluded, the government now feels well-placed to navigate the politics of new lucrative energy sector contracts with interested regional and international economic powers,” Asadullah said.