Chevron Does Bangladesh U-Turn

Chevron has skipped its decision to sell Bangladesh stakes, deciding instead to invest around $400mn on new projects in the country, Bangladeshi state power and energy minister Nasrul Hamid told reporters October 26. “Chevron is not leaving Bangladesh,” he said adding, “The US firm will invest around $400mn afresh.”

Chevron declined to comment but a senior Petrobangla official said the trading environment now was different from before, as the government is to raise gas prices. First LNG imports are due next April.

“Chevron informed us of its decision of staying in Bangladesh and not to sell its Bangladesh stakes formally Wednesday afternoon,” Petrobangla chairman Abul Mansur Md Faizullah told NGW October 26.

He said Chevron will invest the money to build compressor at its Bibiyana gas field, to stabilise production from the country’s largest producing gas field whose output averages 1.25bn ft³/d.

Chevron said April 24 that it had agreed to sell to China's Himalaya Energy the shares of its wholly owned subsidiaries operating three upstream fields in Bangladesh, which account for nearly 58% of the country's gas production. The three production-sharing contracts do not expire until 2028.

State-owned Petrobangla put up a pre-emption challenge to the sale the following day. Petrobangla had also appointed Wood Mackenzie to assess the value of the assets.

Chevron's decision to exit Bangladesh had followed the government's rejection of the company's request in 2015 to hike gas prices, forcing it to withdraw its plans to invest an additional $650mn, an industry insider said requesting anonymity. Chevron gets $2.76/mn Btu for Bibiyana gas. The company was looking for annual tariff increases to ensure the financial viability of additional gas production from the field.

Chevron Bangladesh produces around 1.55bn ft³/d of gas against the country's total supply of 2.68bn ft³/d from three onshore fields: Bibiyana, Jalalabad and Moulavi Bazar.

M Azizur Rahman