We present the first spatially resolved study of molecular gas in the vicinity of a gamma-ray burst (GRB), using CO(2-1) emission-line observations with the Atacama Large Millimetre Array at ∼50 pc scales. The host galaxy of GRB 980425 contains a ring of high column density H i gas, which is likely to have formed due to a collision between the GRB host and its companion galaxy, within which the GRB is located. We detect 11 molecular gas clumps in the galaxy, 7 of which are within the gas ring. The clump closest to the GRB position is at a projected separation of ∼280 pc. Although it is plausible that the GRB progenitor was ejected from clusters formed in this clump, we argue that the in situ formation of the GRB progenitor is the most likely scenario. We measure the molecular gas masses of the clumps and find them to be sufficient for forming massive star clusters. The molecular gas depletion times of the clumps show a variation of ∼2 dex, comparable with the large variation in depletion times found in starburst galaxies in the nearby universe. This demonstrates the presence of starburst modes of star formation on local scales in the galaxy, even while the galaxy as a whole cannot be categorized as a starburst based on its global properties. Our findings suggest that the progenitor of GRB 9802425 was originated in a young massive star cluster formed in the starburst mode of star formation.