Chevron Global Ventures Ltd, the US-based oil giant, has officially informed the Bangladesh government that it has decided to terminate its sale agreement with Himalaya Energy Co. Ltd. and would continue its operations in Bangladesh, putting forward a seven-point charter of demands that it says would allow a smoother operation.
In a letter signed by Steve Wilson, Chevron Bangladesh president, and dated 25 October 2017, the company stated: “We hereby inform Petrobangla that Chevron Global Ventures Ltd will not proceed with the planned share sale of the Chevron Bangladesh Companies to Himalaya Energy Co. Ltd.”
To remain in Bangladesh, however, Chevron has stipulated some conditions related to the investment to continue the production of its three gas fields.
Naser Ahmed, external affairs director of Chevron Bangladesh told The Independent yesterday, “Chevron has decided to retain these assets and will continue to work with our partners Petrobangla and the government to provide reliable and affordable energy to the nation.”
Sources said the efficiency of Petrobangla in negotiations has brought about the
“win-win solution” for both the parties—Petrobangla and Chevron—and has removed the operational uncertainties related to the largest gas field at Bibiyana.
“We always put Bangladesh’s interests first. We feel we should professionally follow the negotiation process so that we could convince the US giant to stay here,” Petrobangla chairman Abul Mansur Md Faizullah told The Independent recently.
“It is good that the oil giant will stay here,” said Dr M Tamim, an energy expert and a Bangladesh University of Engineering and Technology (BUET) professor.
Last week, state minister for power and energy Nasrul Hamid said US oil major Chevron is not leaving Bangladesh; rather, it will invest USD 400 million in the country's gas sector. Headlined ‘Termination of Marketing Process for Chevron Bangladesh’, the letter said: “Chevron Bangladesh Block Twelve, Ltd and Chevron Bangladesh Blocks Thirteen and Fourteen, Ltd (Chevron Bangladesh
companies) refer to the series of previous correspondence, including our last letter to Petrobangla on 11 September 2017, relating to the marketing process that was launched in the first quarter of 2016 by our parent company, Chevron Global Ventures Ltd.”
Chevron added that “the decision to enter the agreement with Himalaya was taken as part of Chevron Corporation’s global divestment programme, which was announced in 2015. Following the decision to terminate the sales agreement with Himalaya, Chevron’s management is now considering the next steps for the Chevron Bangladesh companies.”
The letter stated that “Chevron values its relationship with Petrobangla and the Government of Bangladesh”, adding that “looking ahead, there are several commercial challenges that we will be seeking to engage with Petrobangla to resolve”.
Sources said to stay here for a long period of time, Chevron imposed some conditions. These include the purchase of six bulletproof vehicles for
security purposes, which could cost crores of Taka.
Chevron wants a 10-year extension of 12, 13 and 14 Blocks’ production sharing contract (PSC). These include the production periods of Jalalabad, Moulvibazar and Bibiyana gas fields till 2034.
The US company is also interested to invest USD 400 million to buy a compression project, which will maximize the recovery of reserves and production from the Bibiyana gas field.
It also wants support for an evaluation that a 3D seismic survey is not required at Jalalabad gas field.
Chevron also want the Worker’s Welfare Fund (WPPF)-related payments and legal fees to be included with the cost recovery payment. It has sought a prompt and fair resolution of outstanding cost recovery audit exceptions and reasonable future cost recovery audits following the PSC process.
Chevron has requested a meeting soon with Petrobangla to discuss the issues.
Sources said Chevron also submitted a letter to increase the gas price to Petrobangla under the PSC at USD 3 per mcf (1,000 cubic feet), instead of the current rate of USD 2.76.
Chevron's three gas fields—Bibiyana, Jalalabad and Moulvibazar—share 52 per cent of the total 2700 mmcf gas now being produced by the country's 22 gas fields.
On April 24, 2017, Chevron had 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.
Himalaya is owned by a consortium comprising the state-run China ZhenHua Oil, which is a subsidiary of China’s defence industry conglomerate NORINCO, and investment firm CNIC Corp, a Chinese government platform.