US-based Chevron Bangladesh will build two compressor stations at Bibiyana and Jalalabad gas fields respectively to ramp up natural gas output from the country's northeastern region.
The company is now in talks with top officials of the state-run Petrobangla and the Energy and Mineral Resources Division (EMRD) under the Ministry of power, Energy and Mineral Resources (MPEMR) to finalise terms of the company's fresh investments, a senior ministry official told the FE.
He said the US firm was expected to invest around US$ 400 million to build the compressor stations.
Chevron's investments would be shared by the government under the terms of existing production sharing contract (PSC) with the company, he said.
Bibiyana gas field is Bangladesh's largest gas field in terms of production with the average output of around 1,200 million cubic feet a day (mmcfd) from 26 producing gas fields.
Natural gas output from Jalalbad gas field is currently around 270 mmcfd from seven producing gas fields.
Last year, the US company was interested to leave Bangladesh after selling its stakes to the Chinese joint venture, Himalaya Energy.
In a statement issued on April 24, the company said that it had agreed to sell the shares of its wholly-owned subsidiaries operating three upstream fields in Bangladesh to the Chinese joint venture.
But later it put off its decision to sell Bangladesh stakes following discussion with the top government officials in October, 2017.
Officials said Chevron's decision to exit Bangladesh had followed the government's rejection of the company's request in 2015 to hike gas prices, forcing it to withdraw its plans to invest an additional $650 million in the assets, an industry insider said requesting anonymity.
Chevron gets $2.76 per mcf (1,000 cubic feet) for the Bibiyana gas. The company was looking for annual tariff increases to ensure the financial viability of additional gas production from the field.
The company had also submitted an investment plan worth $650 million to Petrobangla to install a new compression station at the Bibiyana field and drill more wells at the nearby Jalalabad field. Chevron was also seeking a five-year extension to its PSC until 2034.
Chevron Bangladesh currently produces around 1,506 mmcfd of natural gas against the country's total supply of 2,649 mmcfd from three onshore fields --Bibiyana, Jalalabad and Moulavi Bazar, according to data from state-owned Petrobangla as on January 10, 2018.
Bangladesh suffers from a chronic gas shortage of around 600 mmcfd of natural gas.
The shortfall has resulted in the rationing of supply to industries, power plants and fertiliser factories, in addition to the suspension of new piped gas connections to commercial and household consumers.
The government, however, moved to start importing expensive LNG (liquefied natural gas) from April 2018 to cope with the surging demand.
© 2024 - All Rights with The Financial Express
