With cash in hand, US Co resurrects investment plan

With cash in hand, US energy giant Chevron assures state-run Petrobangla of resurrecting its held-back investment worth around US$65 million in Jalalabad compression project, insiders said, as the interim government cleared arrears in gas bill at one go.

The Chevron Bangladesh company assurance came during a joint-management committee meeting recently following a request from Petrobangla to resume the multinational's stalled investment after clearing all overdue payments.

Chevron Bangladesh had put on hold the Jalalabad compression-project investment proposal through a letter to the state corporation on April 4, 2024.

In the letter, Chevron Bangladesh President Eric M walker wrote on deferment of the project until the overdue -payment balance was fully cleared by Petrobangla.

Prior to sending the letter, the arrears in payment to Chevron Bangladesh rose as high as to $280 million.

The international oil company (IOC) Bangladesh outfit had a plan to initiate the compression project in 2023 and it had then approved a budget worth $65 million to implement the project.

But Petrobangla was struggling to make payment to Chevron Bangladesh over the past several years following global economic turmoil caused by the ongoing war between Russia and Ukraine that led to deep currency devaluation.

According to information provided by Chevron a couple of years back, 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, said one source.

"Hence, after the implementation of the project, it will arrest the declining production trend significantly," said a senior Petrobangla official.

The failure to complete the project in 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, he said.

But sources fear that gas production from Jalalabad field wouldn't be as large as Chevron had projected a couple of years back as the field's reserves shrank from the  previous level due to continuous sucking.

"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 reason why such delay in payment.

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

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 government side says in the letter.

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."

He hastens to add: "As a matter of policy, we do not comment on specific commercial matters."

Mr Rahman, however, hails the government gesture in clearing all the  arrears in payments.  "We greatly appreciate the efforts of the interim government, energy ministry, and Petrobangla to resolve this issue."

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 insatiate 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.

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

Petrobangla officials have 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 1.08Bcf 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 Saturday.

Azizjst@yahoo.com