India’s state-owned ONGC Videsh Ltd (OVL) has decided to withdraw from two shallow-water blocks in Bangladesh’s Bay of Bengal after a decade of unsuccessful exploration, leaving the country’s offshore hydrocarbon prospects idle once again.

The two blocks, SS-04 and SS-09, were awarded to OVL under Production Sharing Contracts (PSCs) signed in February 2014. Despite extending the contracts multiple times, the company failed to discover any commercially viable oil or gas reserves.

Confirming the development, Petrobangla Chairman Md Rezanur Rahman told The Financial Express on Thursday that OVL had formally communicated its unwillingness to continue operations in the two blocks. Sources familiar with the agreement said Petrobangla will now confiscate OVL’s $66.20 million bank guarantee, as the company exited without fulfilling its minimum exploration commitments.

The withdrawal follows a decade of effort by OVL, which invested around $63 million in exploration activities. The most notable attempt was the drilling of the Kanchan well in block SS-04, located near Moheshkhali Island, which failed to yield any hydrocarbon reserves. The well reached a depth of over 4,200 metres but revealed only clay and shell-stone layers, with no sandstone formations indicating gas presence.

Under the PSC terms, OVL was obligated to drill two additional wells — Titly in block SS-04 and Moitree in block SS-09 — and complete 2,700 line-kilometres of 2D seismic surveys. However, the company did not move forward with these activities.

Petrobangla officials said OVL had requested to relocate the blocks to more promising areas and sought higher gas prices, but both proposals were rejected. Bangladesh has maintained its position of not revising gas prices after signing PSCs or permitting block relocations.

OVL’s exit follows similar decisions by other international oil companies. In 2019, South Korea’s Posco International and Australia’s Santos withdrew from offshore blocks DS-12 and SS-11, further stalling exploration in Bangladesh’s maritime territory.

The SS-04 and SS-09 blocks cover areas of 7,269 square kilometres and 7,026 square kilometres, respectively, with water depths ranging from 20 to 200 metres. The Kanchan marked the first offshore drilling attempt in Bangladesh’s extended maritime territory in eight years.