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US energy-giant Chevron is set to begin work on the Jalalabad Compression Project (JBC) next year to harness additional natural gas.
"Chevron has submitted a budget of its works for the next year, where it included projected costs of the JBC for the first time," Petrobangla Director (Finance) AKM Mizanur Rahman told The Financial Express on Wednesday.
The Petrobangla officer did not disclose how much Chevron intends to invest in the project in 2026, but sources said the JBC might take several years to complete, with costs estimated at around US$75 million.
Petrobangla had long been pressing Chevron to proceed with the investment, which was deferred earlier due to piling overdue payments to the US company. After clearing all outstanding bills - including late payment interest - Petrobangla wrote to Chevron Bangladesh, requesting the resumption of its stalled $75 million investment in the JBC.
In late August, Petrobangla sought a time-bound action plan for the project. "Your timely action in this regard will be highly appreciated," Mr Rahman wrote to Chevron Bangladesh President Eric M Walker on August 31.
In reply, Mr Walker reiterated Chevron's commitment to move forward with the project but stopped short of confirming a timeline. "I am writing to reiterate the intention of Chevron Bangladesh to proceed with the Jalalabad Compression Project," he said in his response.
Sources said Petrobangla cleared the late payment interest to Chevron on August 28 - one month ahead of the stipulated deadline.
Earlier, on June 22, Mr Walker had written that continuation of the JBC was dependent upon Petrobangla remaining current with its monthly gas and condensate invoices and fully repaying all late payment interest amounts by September 30, 2025.
Petrobangla had already cleared overdue payments, which peaked at $280 million last year.
Market insiders say delays in Chevron's JBC project are slowing the government's efforts to boost domestic energy output. Bangladesh is urgently seeking new investments and exploration opportunities amid dwindling gas reserves and rising LNG subsidies.
Domestic gas production has fallen to around 1,800 million cubic feet per day (mmcfd) - similar to levels in 2008-09 - after peaking in fiscal 2016-17. The country's highest-ever production was 2,786 mmcfd recorded on May 6, 2015.
To date, Bangladesh has consumed an estimated 15 trillion cubic feet (Tcf) of gas, with remaining reserves below 9 Tcf - projected to deplete by 2030 at the current rate.
Meanwhile, subsidies for LNG imports surged by 48.33 per cent year-on-year to Tk 89 billion in FY2024-25, despite at least five tariff hikes over the past six years following repeated IMF calls to phase out subsidies.
Petrobangla received Tk 60 billion from the Ministry of Finance to import LNG in FY2023-24. Since 2018, the government has spent more than Tk 367.12 billion in total subsidies for LNG imports.
Chevron had initially planned to start the JBC in 2023 with an approved budget of $65 million, but deferred it on April 4, 2024, citing Petrobangla's overdue payments.
According to Chevron's earlier estimates, the project could unlock 352 billion cubic feet (Bcf) of additional gas from the Jalalabad field.
"After the project's implementation, it will significantly arrest the declining production trend," said a senior Petrobangla official. Failure to complete it on time, he warned, would lead to a sharp drop in gas output, undermining efforts to extend production from blocks 13 and 14.
Asked about the company's plans, Shaikh Jahidur Rahman, Chevron Bangladesh's media and communications manager, said, "Over the last 30 years, we have worked in partnership with Petrobangla and the Bangladesh government to support the country's energy needs. While we don't disclose specific commercial plans, Chevron Bangladesh remains committed to providing affordable, reliable and ever-cleaner energy to the nation."
Chevron currently produces about 1,047 mmcfd of gas from its three onshore fields - Bibiyana, Jalalabad and Moulvibazar - located in blocks 12, 13 and 14. This accounts for roughly 58 per cent of Bangladesh's total domestic gas output, according to Petrobangla data as of September 14.
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