Government high-ups have requested American energy giant Chevron to continue gas production from its three onshore fields uninterruptedly amid overdue payments piling up for fund constraints, sources say.
Chevron Bangladesh company has backtracked on its hard line for now and continues production.
The development comes following recent discussions of the finance minister and the central bank governor with top officials of Chevron to pacify it to continue operations, the sources said.
Since then, state corporation Petrobangla has increased payment, slightly though, to Chevron against its outstanding gas bills.
Months ago, sources said, the local chapter of the US-based international oil company or IOC had requested Petrobangla in a letter to clear all its payment arrears, amounting to $280.72 million, by a cutoff time of 31 August 2023.
Later, the Petrobangla chairman apprised the energy secretary of the matter and requested the Bangladesh Bank and other relevant commercial banks to provide necessary dollars to clear dues for the sake of uninterrupted gas supply.
Petrobangla apprehended an impending disaster in the country's overall gas supply from the Chevron-operated largest gas fields due to unpaid bills that kept mounting since April 2022, said sources.
Petrobangla owes more than $280 million for gas purchase from the US oil major.
Bangladesh could not clear payments to Chevron for over a year, from April 2022 to May 2023, amid dollar crunch, with the prospect of supply disruption from its largest producer, according to sources.
As per the gas purchase and sales agreement (GPSA) between Chevron and Petrobangla, the company has the liberty to halt production if non-payment exceeds a five-month period, says an official.
According to article 14.3 of the GPSA, the seller shall not be obligated to supply any gas to the buyer if the buyer's payment is over five-month late from when payment is due.
"In this event, the seller shall have the right to defer delivery of gas without violating this Agreement or the PSC until all unpaid payments for the gas delivered to the buyer which are three (03) months' overdue are cleared."
Petrobangla chairman Zanendra Nath Sarker has said the corporation is trying for arranging funds and making payment. "Petrobangla is trying to clear all the dues to Chevron as soon as possible."
He adds: "On a couple of occasions recently, we have discussed with the central bank the matter of facilitating payment to Chevron."
Mr Sarker said Bangladesh never before defaulted on paying Chevron gas bills. "Bangladesh used to make payment within one month of getting natural gas supplied into its national gas grid."
Chevron produces 1,280 million cubic feet per day (mmcfd), accounting for around 60 per cent of the total output from local gas fields, according to Petrobangla's reckonings on September 09.
The US hydrocarbon explorer has three operating onshore fields - Bibiyana, Jalalabad and Moulvibazar - located in blocks 12, 13 and 14 respectively.
Bangladesh's overall natural gas output is currently hovering around 2,879mmcfd, including 749mmcfd regasified LNG, further reveal Petrobangla data.
Even with gas bills ballooning, Chevron started drilling the 27th well in the country's largest-producing Bibiyana gas field weeks ago.
The gas field under block 12 in north-eastern Habiganj district is currently producing around 1,089mmcfd gas, which accounts for over half the total output from local gas fields.
Chevron Bangladesh has planned to drill several gas wells in the newly obtained 'flank' area if the Bibiyana-27 well drilling comes out successful.
Last year, the US oil major obtained a 60-square-kilometre 'flank' area outside its existing contract zone to the north of Bibiyana to carry out exploration afresh, as Bangladesh's fuel demand remains insatiate and the government takes recourse to import of expensive liquefied natural gas (LNG) to feed industries and households.
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