Chevron Bangladesh deal with Himalaya

Govt to examine documents

The state-run Petrobangla will examine all documents relating to the transfer of Chevron’s Bangladesh operations to Chinese company Himalaya Energy Co. Ltd, as the US oil giant struck the deal without the government’s nod.

Sources in Petrobangla said the move comes in the wake of Chevron’s announcement of the sales deal with Himalaya on Monday. It irked the government, which had also expressed willingness to buy the company’s assets in the country.
Chevron did not even take Petrobangla’s permission to transfer its Bangladesh assets to Himalaya, contrary to the provision for share transfer stipulated in the new production sharing contract (PSC).

The American company apparently followed the old PSC that allows any foreign company to sell its Bangladesh assets without the government’s permission.
Top-level sources told The Independent that the government will verify all the share-transfer documents to know whether any sensitive matter is involved, as the Chinese firm will get half of Bangladesh’s gas resources.
“The assets sale to the Chinese firm will not be easy, as the government will check all the clauses of the PSC to protect the country’s interest,” said a senior official of Petrobangla, the state-owned oil and gas corporation.
“The US giant had only informed the government that it is in the process of selling its shares to the Chinese company. But it never sent any letter to inform the government that it has sold the assignments in three gas fields. They simply ignored the norms,” said another government official. On April 24, Chevron announced that it had entered into an agreement with the Himalaya Energy Co. Ltd to sell its Bangladesh operations. Himalaya Energy is owned by China ZhenHua Oil Co. and CNIC Corporation Ltd.
ZhenHua is a subsidiary of China’s defence industry conglomerate NORINCO. A completed deal would mark China’s first major energy investment in Bangladesh, where Beijing is competing with New Delhi and Tokyo for influence.
In a statement issued from Chevron’s headquarters in San Ramon, California, USA, the energy giant said that its wholly-owned subsidiary, Chevron Global Ventures Ltd, had entered into an agreement to sell the shares of its wholly-owned indirect subsidiaries operating in Bangladesh to Himalaya Energy Co. Ltd.
After the statement, Petrobangla started preparing a report indicating that “Chevron needs to get the government’s approval to transfer their assignment”. Petrobangla has two PSCs with Chevron in Blocks 12, 13 and 14, which gives it a 33-percent share of gas at Jalalabad and Moulavi Bazar fields as well as an assignment to operate the fields. The deal was signed on January 11, 1995, with Occidental. The assignment was later transferred to another US company, Unocal, and then, in 2006, to Chevron.
“The PSCs with Chevron are some of the oldest that do not describe anything about the share of the IOC (international oil company). The American company exploited this opportunity when they transferred the assets to the Chinese firm. But when the operational authority is transferred, they will need the approval of Petrobangla,” said a Petrobangla official. 
“That clause was included in the new PSCs,” he added.
The Independent has obtained a copy of the PSC between Chevron and Petrobangla. 
Article 31.3 on page 77 says: “Subject to prior written approval of Petrobangla, which shall not be withheld unreasonably, the contractor may assign any part or all of its rights, interests, and obligations under this contract to a non-affiliated third party for consideration to be given to any such request.”
Article 31.3.1 of the PSC states that “all accrued obligations of the assignor deriving from this contract must have been duty fulfilled as of the date such request is made, or assignor and assignee must jointly and severally guarantee the fulfilment of any unfulfilled accrued obligations of assignors”.
Article 31.3.3 states that “the instruments of assignment shall be submitted to Petrobangla and the government for scrutiny and approval and shall include provisions stating precisely that the assignee is bound by all covenants contained in this contract and any amendments thereto”.
“The article gives the government the power to verify all the documents of the share transfer,” said an official of the energy ministry. The estimated value of the gas fields operated by Chevron is USD 2 billion. The largest gas field in Bangladesh, Bibiyana, is also in the list.
Petrobangla chairman Abul Mansur Md Faizullah told The Independent that the government so far has not permitted any share transfer. “How can they sell the shares to another IOC before getting our permission?” he added.
Chevron’s spokesperson Naser Ahmed told the Independent yesterday: “The Government of Bangladesh is an important and valued partner. It is critical to the ongoing success of the business including the transition to the new owner. We will continue to maintain open communication with the government as the transition process progresses.”  

 

 

Chevron Bangladesh deal with Himalaya

Govt to examine documents

The state-run Petrobangla will examine all documents relating to the transfer of Chevrons Bangladesh operations to Chinese company Himalaya Energy Co. Ltd, as the US oil giant struck the deal without the governments nod. Sources in Petrobangla said the move comes in the wake of Chevrons announcement of the sales deal with Himalaya on Monday. It irked the government, which had also expressed willingness to buy the companys assets in the country. Chevron did not even take Petrobanglas permission to transfer its Bangladesh assetsto Himalaya, contrary to the provision for share transfer stipulated in the new production sharing contract (PSC). The American company apparently followed the old PSC that allows any foreign company to sell its Bangladesh assets without the governments permission. Top-level sources told The Independent that the government will verify all the share-transfer documents to know whether any sensitive matter is involved, as the Chinese firm will get half of Bangladeshs gas resources. The assets sale to the Chinese firm will not be easy, as the government will check all the clauses of the PSC to protect the countrys interest, said a senior official of Petrobangla, the state-owned oil and gas corporation. The US giant had only informed the government that it is in the process of selling its shares to the Chinese company. But it never sent any letter to inform the government that it has sold the assignments in three gas fields. They simply ignored the norms, said another government official. On April 24, Chevron announced that it had entered into an agreement with the Himalaya Energy Co. Ltd to sell its Bangladesh operations. Himalaya Energy is owned by China ZhenHua Oil Co. and CNIC Corporation Ltd. ZhenHua is a subsidiary of Chinas defence industry conglomerate NORINCO. A completed deal would mark Chinas first major energy investment in Bangladesh, where Beijing is competing with New Delhi and Tokyo for influence. In a statement issued from Chevrons headquarters in San Ramon, California, USA, the energy giant said that its wholly-owned subsidiary, Chevron Global Ventures Ltd, had entered into an agreement to sell the shares of its wholly-owned indirect subsidiaries operating in Bangladesh to Himalaya Energy Co. Ltd. After the statement, Petrobangla started preparing a report indicating that Chevron needs to get the governments approval to transfer their assignment. Petrobangla has two PSCs with Chevron in Blocks 12, 13 and 14, which gives it a 33-percent share of gas at Jalalabad and Moulavi Bazar fields as well as an assignment to operate the fields. The deal was signed on January 11, 1995, with Occidental. The assignment was later transferred to another US company, Unocal, and then, in 2006, to Chevron. The PSCs with Chevron are some of the oldest that do not describe anything about the share of the IOC (international oil company). The American company exploited this opportunity when they transferred the assets to the Chinese firm. But when the operational authority is transferred, they will need the approval of Petrobangla, said a Petrobangla official. That clause was included in the new PSCs, he added. The Independent has obtained a copy of the PSC between Chevron and Petrobangla. Article 31.3 on page 77 says: Subject to prior written approval of Petrobangla, which shall not be withheld unreasonably, the contractor may assign any part or all of its rights, interests, and obligations under this contract to a non-affiliated third party for consideration to be given to any such request. Article 31.3.1 of the PSC states that all accrued obligations of the assignor deriving from this contract must have been duty fulfilled as of the date such request is made, or assignor and assignee must jointly and severally guarantee the fulfilment of any unfulfilled accrued obligations of assignors. Article 31.3.3 states that the instruments of assignment shall be submitted to Petrobangla and the government for scrutiny and approval and shall include provisions stating precisely that the assignee is bound by all covenants contained in this contract and any amendments thereto. The article gives the government the power to verify all the documents of the share transfer, said an official of the energy ministry. The estimated value of the gas fields operated by Chevron is USD 2 billion. The largest gas field in Bangladesh, Bibiyana, is also in the list. Petrobangla chairman Abul Mansur Md Faizullah told The Independent that the government so far has not permitted any share transfer. How can they sell the shares to another IOC before getting our permission? he added. Chevrons spokesperson Naser Ahmed told the Independent yesterday: The Government of Bangladesh is an important and valued partner. It is critical to the ongoing success of the business including the transition to the new owner. We will continue to maintain open communication with the government as the transition process progresses.