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After a year-long standstill, Chevron Bangladesh is set to resume its Jalalabad Compression Project, following the settlement of overdue payments by state-run Petrobangla.
The move signals renewed momentum in Chevron's investment plans to bolster Bangladesh's domestic gas output at a time of growing energy demand and depleting reserves.
"Chevron Bangladesh President Eric M Walker conveyed the company's intent in a recent meeting with me," Petrobangla Chairman Md Rezanur Rahman told The Financial Express Thursday.
He (Mr Walker) formally confirmed it in a letter dated June 22 to Petrobangla's Director (finance) AKM Mizanur Rahman.
The US energy giant plans to invest between $80 million and $90 million to complete the project, which is expected to help arrest the ongoing decline in gas production from the Jalalabad field, said the finance director.
Chevron Bangladesh, a subsidiary of US energy major Chevron, had earlier stalled the Jalalabad Compression Project due to unpaid dues by Petrobangla, which had reached as high as $280 million.
The project aims to enhance gas extraction from the Jalalabad gas field, potentially unlocking an additional 352 billion cubic feet (Bcf) of gas, according to earlier Chevron estimates.
In his June 22 letter, Mr Walker acknowledged Petrobangla's payment of the arrears in April as a "positive outcome" and cited it as the reason for resuming the project.
He, however, noted that continued work on the project will depend on Petrobangla staying current on its monthly gas and condensate payments, and settling outstanding late payment interest, amounting to around $25-26 million, by September 30, 2025.
Petrobangla said it expects to pay the interest by July.
Petrobangla had requested Chevron in April to resume the investment, after clearing the dues and committing to a payment schedule.
The US company had previously deferred the project in April 2024, demanding full repayment of arrears before proceeding.
Meanwhile, Chevron has a separate $500 million investment proposal pending with Petrobangla. It seeks rights to explore Block-11 and expand its reach over Block-12 in the gas-rich Surma Basin in northeastern Bangladesh.
The company aims to discover fresh gas supplies to meet the country's growing energy needs, leveraging its existing Bibiyana gas processing infrastructure to fast-track production if discoveries are made.
Chevron is already the largest natural gas producer in Bangladesh, supplying around 1.08 billion cubic feet per day (Bcf/d) from its three onshore fields-Bibiyana, Jalalabad, and Moulavi Bazar-located in blocks 12, 13, and 14.
From its recently drilled BY-28 well in the Bibiyana field alone, it currently supplies around 40,000 Mcf/d of gas into the national grid.
A few years ago, Petrobangla had allowed Chevron to expand its operational area by granting access to a 60 sq km 'flank' zone north of the Bibiyana field.
Chevron subsequently invested $150 million in drilling the BY-27 and BY-28 wells.
According to sources familiar with the matter, if new gas reserves are discovered in Block-11 or the extended area of Block-12, Chevron can swiftly ramp up production, potentially reaching up to 1.35 Bcf/d, using its existing processing facilities.
Petrobangla has yet to formally approve Chevron's broader exploration and investment plans, but energy officials suggest the successful resolution of the arrears dispute may pave the way for deeper collaboration.
Azizjst@yahoo.com