Bangladesh seeks resumption of Chevron's $65m stalled investment

Bangladesh has sought the resumption of Chevron Bangladesh's stalled investment worth around $65 million after clearing all overdue payments to the US-based oil-and gas-exploration company.

"We have requested the US company to resume its last year's deferred investment plan in a compression project at the Jalalabad gas plant as we have already cleared all outstanding arrear payments of Chevron Bangladesh," state-run Petrobangla Chairman Md Rezanur Rahman told The Financial Express Monday.

Petrobangla cleared all the overdue arrear payments along with regular ones worth around $190 million of Chevron Bangladesh, a part of the global energy company Chevron, late last month, paving the way for fresh investments by Chevron in oil and gas exploration in the country.

Chevron Bangladesh had deferred the Jalalabad compression project investment proposal through a letter to Petrobangla on April 4, 2024.

In the letter, Chevron Bangladesh President Eric M walker wrote to defer the project until the overdue payment balance was fully cleared by Petrobangla.

Prior to sending the letter, the overdue arrear payment of Chevron Bangladesh rose to as high as $280 million.

Responding to the letter, Petrobangla through another letter in November 2024 intended to clear the overdue amount within six months from November 2024 to April 2025, along with the regular payment.

"As Petrobangla has cleared all its overdue payments, therefore it is expected that Chevron Bangladesh will resume the Jalalabad compression project soon to avail the project benefits and economics," said the Petrobangla chairman.

According to information provided by Chevron Bangladesh, upon completion of the project, it will be possible to extract an additional 352 billion cubic feet (Bcf) of gas from the Jalalabad gas field, he said.

Hence, after the implementation of the project, it will arrest the declining production trend significantly, industry insiders said.

The failure to complete the project on time will result in a significant reduction in gas production, which will undermine the main purpose of the second extension of production period for blocks 13 and 14, they said.

"Bangladesh has been facing a significant challenge in foreign currency issue since June 2022. As a result, Petrobangla was unable to pay regular invoices despite its keenness," a recent Petrobangla letter to the Chevron Bangladesh president clarified the reasons behind delayed payments.

Regardless of this, Petrobangla shows its testament of good intention and commitment towards the repayment plan, the Petrobangla letter issued by its Director (finance) AKM Mizanur Rahman stated.

Due to the present government's fair, transparent, accountable, and effective policies and activities, the foreign currency availability situation has changed, it said.

In these circumstances, Petrobangla has cleared all outstanding arrear balance, including regular invoices, within the timeframe, it also said.

"It translates that Petrobangla always remains dedicated to its commitment. We further expect that it will continue in the future too," the letter pointed out.

When asked about the investment plan, Chevron Bangladesh Media and Communications Manager Shaikh Jahidur Rahman said, "As part of our ongoing efforts to support the government in maintaining uninterrupted gas supply, the team is always evaluating various opportunities."

"As a matter of policy, we do not comment on specific commercial matters," he added.

Mr Rahman, however, hailed the government's clearing of all the overdue arrear payments, saying, "We greatly appreciate the efforts of the interim government, energy ministry, and Petrobangla to resolve this issue."

This outcome sends a positive signal to the existing and potential investors, he said, adding, "We have been a partner in ensuring Bangladesh's energy security and driving economic progress for 30 years and look forward to continuing the journey together."

Separately, another investment proposal of Chevron Bangladesh worth around $500 million to develop Bangladesh's onshore hydrocarbon block-11 and attain exploration rights over an extended area of block-12 in the Surma basin is currently pending with Petrobangla for approval.

Chevron plans to explore these blocks to discover fresh gas, a move that would augment supplies to meet the country's energy needs.

The gas-rich Surma basin is situated in the country's northeast, and the region contributes much of the natural gas in the national gas grid.

Chevron had previously invested around $500 million under its Bibiyana project during 2012-2015. It included a gas plant expansion, new development wells, and an enhanced liquid-recovery unit, Platts reported previously.

If new gas is discovered, Chevron would be able to supply natural gas within the shortest possible time using the same processing plant it uses to process Bibiyana gas, sources familiar with the situation said.

Chevron could ramp up natural gas production by up to 1.35 billion cubic feet/day from Bibiyana gas field and the new areas using the currently operational Bibiyana process plant, they added.

Petrobangla officials said the company has not yet made any decision on Chevron's hydrocarbon exploration and its investment plan.

Chevron Bangladesh is currently the largest producer of natural gas in Bangladesh with its output of around 1.09 Bcf per day from three of its onshore fields - Bibiyana, Jalalabad, and Moulavi Bazar, which are in blocks 12, 13, and 14, respectively, according to official Petrobangla data as of Monday.

Azizjst@yahoo.com