Falling Domestic Gas Output: Chevron restarts delayed JBC project

Chevron Bangladesh has finally moved to revive its long-delayed Jalalabad Compression Project (JBC), breaking nearly two years of uncertainty over one of the country's most-anticipated gas-sector investments.

The restart comes at a time when domestic output is declining and the government is scrambling for new supplies to ease mounting pressure on industries, power plants and consumers.

Senior officials say the US energy major has now committed to completing the work within the next two years at an estimated cost of around US$75 million.

Petrobangla, which had been urging Chevron to proceed despite earlier disputes over unpaid invoices, cleared all outstanding bills and late-payment interest ahead of the agreed deadline, clearing the way for the project to resume.

Gas sector insiders describe the restart as a crucial step towards slowing the steep fall in domestic production, as the Jalalabad field remains one of the country's most significant remaining gas sources.

"Chevron intends to complete the project within the next two years," a senior Petrobangla official told The Financial Express on Tuesday.

The US energy major has submitted a work plan that, for the first time, outlines the full projected costs of the JBC, said Petrobangla's director for finance, AKM Mizanur Rahman.

Chevron Bangladesh is currently arranging the necessary equipment and manpower, with the project now targeted for completion by 2028, an insider said.

The Jalalabad gas field is producing around 137 million cubic feet per day (mmcfd) from seven wells, just 51 per cent of its combined production capacity of 270 mmcfd, according to Petrobangla data.

Petrobangla has long been pressing Chevron Bangladesh, a subsidiary of global energy company Chevron, to proceed with the investment. The costs will be recovered under the production sharing contract (PSC) signed between the two parties, said the official.

After clearing all outstanding bills, including late-payment interest, Petrobangla wrote to Chevron Bangladesh in April requesting the resumption of the stalled project.

In late August, Petrobangla sought a time-bound action plan from Chevron for the JBC, Rahman added.

Petrobangla paid the late-payment interest on August 28, one month ahead of the deadline set by both sides.

Earlier, on June 22, Chevron Bangladesh President Eric M Walker wrote to Petrobangla stating that continuation of the JBC depended on Petrobangla keeping current with monthly gas and condensate payments and repaying all overdue interest by 30 September.

Petrobangla has since cleared all overdue payments, which had peaked at US$280 million last year.

The delay in implementing the JBC has slowed the government's efforts to boost domestic energy output, the official said. Bangladesh is urgently seeking new investments and exploration opportunities amid dwindling reserves and rising LNG subsidy costs.

Domestic gas production has now fallen below 1,800 mmcfd, levels last seen in 2008-09, after peaking in fiscal year 2016-17. The highest-ever recorded output was 2,786 mmcfd on May 6, 2015.

Chevron had originally planned to start the JBC in 2023 with an approved budget of US$65 million but deferred the project on April 4, 2024 due to Petrobangla's overdue payments.

The compression project is expected to unlock an estimated 280 billion cubic feet (Bcf) of additional gas from the Jalalabad field.

Its timely completion will help slow the rapid decline in production, Rahman said, warning that delays would trigger a sharp drop in output and undermine efforts to extend production from blocks 13 and 14.

Asked about the company's plans, Chevron Bangladesh's media and communications manager, Shaikh Jahidur Rahman, said: "Over the last 30 years, we have been working 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 1,014 mmcfd of gas from its three onshore fields - Bibiyana, Jalalabad and Moulvibazar - located in blocks 12, 13 and 14.

This accounts for roughly 59 per cent of Bangladesh's total domestic gas output of around 1,730 mmcfd, according to Petrobangla data as of December 2, 2025.

Bangladesh's natural gas demand stands at around 4,000 mmcfd. To meet the shortfall, the country is increasingly relying on liquefied natural gas.

With total supply currently hovering around 2,634 mmcfd, 896 mmcfd is re-gasified LNG and 1,738 mmcfd comes from domestic fields, Petrobangla data show.

azizjst@yahoo.com