Chevron still sticks to its decision on delaying construction

American oil-major Chevron has not yet reversed its decision to defer the $65-million Jalalabad compression project in northeastern Bangladesh.
In April, Chevron Bangladesh informed the state-run Petrobangla of its decision to delay the construction of its natural-gas-compression station near the Jalalabad gas field following the nonpayment of around $230 million in overdue gas bills, market sources said.
The US oil-and-gas explorer, the largest natural-gas producer in Bangladesh, had approved a budget worth $65 million last year to build the compression station by 2025.
It had been carrying out preliminary work to initiate the construction of the station this year, aiming to complete it by next year.
A compressor station is a facility which helps the process of transporting natural gas from one location to another.
Chevron is now conducting regular maintenance work in all of its three gas fields -- Bibiyana, Jalalabad and Maulavibazar -- taking advantage of the reduced natural gas and power demands during the Eid vacation in industries.
Country's natural gas output dropped by 19.23 per cent to only around 2,100 million cubic feet per day (mmcfd), including around 599 mmcfd of re-gasified liquefied natural gas (LNG), on Tuesday from around 2,600 mmcfd during the pre-Eid vacation period.
Most of the country's gas-guzzling industries are now shut on Eid vacations, and the lower production of natural gas is not affecting their output, a senior Petrobangla official said.
US's Chevron, however, is carrying out drilling works under the ongoing Bibiyana optimisation project. The company has, so far, invested $200 million and completed the drilling of BY28 well.
It is now drilling BY27 well, according to a senior Petrobangla official.
Chevron has employed US-based Parker Drilling Company to carry out the job of drilling Bibiyana gas wells and pays $50,000 daily as its rig rent.
Petrobangla has not been able to pay regularly to Chevron for the gas produced and supplied from wells in this country since September 2022.
The corporation owes an estimated $230 million to the international oil company, according to market sources.
According to the gas purchase and sales agreement between Chevron and Petrobangla, the IOC has the liberty to shut production if non-payment exceeds a five-month period, says the official.
According to article 14.3 of the agreement, the seller shall not be obligated to supply gas if the buyer defaults on payment for over five months from the due date for payment.
In this event, the seller does have the right to defer delivery of gas without violating this agreement or the PSC until all unpaid payments for gas delivered to the buyer are three months' dues, it says.
"All quantities of gas for which seller shall defer deliveries hereunder shall be deemed to have been delivered to the buyer for purposes of calculating ACQ, DCQ, take-or-pay volume, deficiency volume and other relevant provisions hereunder. Each day of deferral shall extend the production period by one day," reads the deal.
It means, according to sources, Chevron can halt supplies anytime under the PSC (production-sharing contract).
Market sources say Petrobangla has, however, never defaulted in paying Chevron gas bills before and used to make payments within one month of gas supply into the national gas grid.
Chevron has invested in Bangladesh's hydrocarbons sector for more than 30 years.
With the payments stalled, sources say, Chevron is not being able to carry out jobs like optimisation of the Bibiyana gas field, installing the compression station and drilling new wells to ramp up the fuel output.
The company usually funds its development works with the revenue generated from gas sales.
Expecting increased engagement in oil-gas exploration activity by Chevron, the government recently approved the expansion of the Bibiyana gas field by an additional 60 square kilometres as a "flank" area.
"Petrobangla is trying to clear all dues to Chevron as soon as possible," says the corporation official.
About the deferment of Jalalabad compression station, Chevron Bangladesh communications manager Shaikh Jahidur Rahman says, "Chevron Bangladesh can confirm it has deferred a planned investment in a project designed to increase gas output at Jalalabad Gas Plant pending resolution of overdue payments from Petrobangla."
The US company hopes the situation will be resolved quickly to enable future investment in the growth of Bangladesh's energy resources, according to a statement.

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