The government has rejected Chevron's plea to raise natural gas tariff of its Bibiyana gas-field by 3.0 per cent annually and extending tenure of the production sharing contract (PSC), a top official said.
"We have rejected the proposal, as there is no such provision for raising natural gas tariff in the PSC inked with the US firm," Petrobangla director for PSC Md Quamruzzaman told the FE Sunday.
The US oil and gas major Chevron sought an increase in natural gas tariff from its Bibiyana field in the country's north-eastern region to ensure 'the fiscal viability of additional natural gas supply from the field'.
Bibiyana is currently the country's largest producing gas-field, supplying around 1.0 billion cubic feet (Bcf) per day of gas, or over 40 per cent of the country's overall natural gas output of around 2.47 Bcf per day.
Chevron is currently getting US$2.76 per Mcf (1,000 cubic feet) for the gas from the Bibiyana field.
Currently all the international oil companies (IOCs) operating in Bangladesh sell their portion of natural gas in line with their respective PSC without any provision of annual hike in gas tariff.
The state-owned Petrobangla, however, revised PSCs for deep-water blocks in the 2012 bidding round to make the bidding attractive to IOCs.
The revisions included a 2.0 per cent hike in natural gas tariff annually apart from significant fiscal and commercial improvements, enhanced annual cost recovery limits, tax waiver for contractors for the entire life of the project, no transmission tariff, and scope to sell gas to a third party within the country.
Petrobangla also turned down the Chevron's plea to increase the PSC tenure by five more years.
Chevron earlier sought additional areas near its Jalalabad gas-field in the same region to carry out additional exploration. It also sought to drill deeper than 3,100 metres in the gas-field to explore more.
Petrobangla, however, turned down both the proposals of Chevron, said Mr Quamruzzaman.
Chevron Bangladesh President Geoffrey Strong told the FE in November that it was eying further investment in oil and gas exploration activities here to meet the country's mounting energy demand.
The US firm submitted a fresh investment proposal worth around $650 million to Petrobangla to install one new compression station in Bibiyana gas-field and drill more wells in Jalalabad gas-field, following commencement of the $500 million Bibiyana Expansion Project, he also said.
The US oil and gas major has already invested around $1.5 billion in the past decade's oil and gas activities in Bangladesh, he added.
"The country requires an increase in exploration and development efforts for the lowest cost energy source - domestically produced natural gas - to address its current primary energy crisis," said Mr Strong supporting the increased investment plan.
Natural gas is currently available at about one-fifth cost of imported fuels, such as - diesel, furnace oil, liquefied petroleum gas (LPG) and liquefied natural gas (LNG).
To ensure the increase in exploration and development efforts, the government should harness the capabilities of not only Petrobangla and Bapex, but also of other competent investors, the Chevron official pointed out.
"This needs to be done urgently before Bangladesh's gas production begins to decline. In the long term, all forms of energy will be required to meet the country's growing needs, including more expensive coal, LNG and solar."
Spelling out his company's interest for further investment in Bangladesh, Mr Strong said: "Chevron has the organizational, technological and financial capability that can be harnessed by Bangladesh to find and develop more gas resources for the nation."
Bangladesh requires more investment in the onshore and offshore areas to protect the country's energy security, and Chevron has a long history of demonstrated performance in growing production, he added.
"We are working with Petrobangla and the government to find areas where Chevron can help to do more, to not only find and develop more gas, but also to help Petrobangla grow its capabilities," he added.
Chevron operates three gas-fields and a compressor station, all located in the Sylhet region. It recently announced the commencement of natural gas production from the Bibiyana Expansion Project.
"This flagship project is the largest foreign investment project in Bangladesh's history. Once fully operational next year, the project will deliver an additional 300,000 Mcf of natural gas per day, and 4,000 barrels of condensate."
"In Jalalabad, we plan to complete drilling three new producing wells early next year. These new wells will help maintain the current production level there for a few more years," he added.
Chevron is the largest producer of natural gas in Bangladesh, currently delivering around 1.29 Bcf per day of natural gas, accounting over 52 per cent of the country's total supply, according to Petrobangla data, as on December 23, 2014. The country's overall natural gas demand is around 3.0 Bcf per day.
azizjst@yahoo.com
Govt bins Chevron\\\'s plea to raise gas tariff, extend PSC tenure
M Azizur Rahman | Published: December 29, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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