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Petrobangla plans to buy out Chevron operations

  • Published at 11:55 pm May 15th, 2017
  • Last updated at 12:04 am May 16th, 2017
Petrobangla plans to buy out Chevron operations
The government may not approve Chevron Bangladesh selling its operations here to a Chinese consortium. The company, which plans to pull out of the country, has signed a preliminary deal with Zhenhua Oil, a subsidiary of China’s defence industry conglomerate Norinco, to sell its shares in the three gas fields in Bangladesh reportedly valued around $2 billion. The deal, if completed, would have marked China’s first major energy investment in the South Asian country. Earlier, Indian Oil and Natural Gas Corporation and Hong Kong based United Energy Group Ltd had bid to purchase to company. A subsidiary of US-based oil giant Chevron, Chevron Bangladesh operates under production sharing contract at the Bibiyana gas field in block 12, and Jalalabad and Moulvibazar fields in blocks 13 and 14. An official of the Energy and Mineral Resources Division, seeking anonymity, said that the government wants to buy those three shares itself or let an international company vetted by the government buy them. The government’s stand is that Chevron has been operating efficiently in those three gas fields, extracting half of the total gas production in Bangladesh. “If they quit here, there will be a huge risk of crisis in gas extraction here in Bangladesh,” the official said. The official also said Bangladesh Gas Fields Company Ltd, a subsidiary of Petrobangla, had appointed British firm Wood Mackenzie as a consultant to evaluate the assets and liabilities of Chevron as part of a move to buy the shares. The Petrobangla chairman and other top officials have met recently with officials from Standard Chartered Bank to discuss loan options to buy the share of Chevron and have had a positive response. Chevron is divesting its assets to counter an energy-price slump. Petrobangla Chairman Abul Mansur Md Faizullah said: “We are being informed that Chevron has already made a deal with a Chinese company. But without a decision from Petrobangla and the government, they cannot sell the shares. We have not informed them of any of our decisions yet. “A consulting firm under Petrobangla is now working to identify the total assets of the gas fields. Very soon they will submit their report.” On April 24, Chevron announced that its wholly-owned subsidiary, Chevron Global Ventures, Ltd, has entered into an agreement to sell the shares of its wholly-owned indirect subsidiaries operating in Bangladesh to Himalaya Energy Co Ltd. Closing of the transaction is subject to the satisfaction of certain closing conditions. Himalaya Energy is owned by a consortium of Zhenhua Oil and CNIC Corporation. The officials of ZhenHua Oil have reportedly visited the fields to evaluate the flow of gas. An official of Chevron wishing anonymity said to the Dhaka Tribune: “Indian Oil and Natural Gas Corporation and Hong Kong based United Energy Group Ltd were the bidders but finally Himalaya Energy Co Ltd won the bid.” Chevron currently sells all the gas production from these fields to Petrobangla. Its net daily production last year averaged 720 million cubic feet of natural gas and 3,000 barrels of condensate, according to its website. State Minister for Power, Energy and Mineral Resources Nasrul Hamid has recently said that the government wants to purchase the Chevron shares after fulfilling certain conditions, as Bangladesh needs more energy. When contacted in this regard, Shaikh Jahidur Rahman, communications manager (external affairs) of Chevron Bangladesh, said: “Petrobangla is a valued partner and was informed of key developments in the sale process at appropriate times, noting the commercially sensitive nature of the transaction.” Energy expert and Dhaka University Geology Professor Badrul Imam said: “It is very difficult to operate those three gas fields. The pressure of those gas fields are very high. A lot of technical knowledge is required. So these gas fields should not be handed over to infamous companies.”
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