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7 August, 2017 12:46:18 AM
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Chevron Bangladesh assets worth close to $2 billion

Wood Mackenzie report
SHAHED SIDDIQUE
Chevron Bangladesh assets worth close to $2 billion

The government would require close to USD 2 billion to acquire Chevron’s assets in Bangladesh which the US oil giant has sold to Himalaya Energy Co. Ltd., a Chinese consortium, according to a report by Wood Mackenzie. Wood Mackenzie is a global energy, chemicals, renewables, metals and mining research and consultancy group.

Not only that, in order to develop the fields—including Bibiyana—an additional USD 500 million would be required to keep the production steady for the next few years. Sources in the Energy Division disclosed this to this correspondent, citing Wood Mackenzie’s primary report on Chevron’s assets, which was submitted to Petrobangla, the state-owned oil and gas corporation, last week.

After receiving the report, the top echelons of the government again instructed the concern at a meeting at the Secretariat that the government is not thinking of anything other than buying the assets of Chevron, which it might have already transferred to the Chinese consortium. The meeting was held on 25 July. It was presided over by Dr Tawfiq-e-Elahi Chowdhury, energy adviser to Prime Minister Sheikh Hasina. Nasrul Hamid, the state minister for power, energy, and mineral resources, was also present.

Sources said copies of Wood Mackenzie’s report were distributed among the policymakers and government officials. Wood Mackenzie was assigned by Bangladesh Gas Fields Company Limited (BGFCL) to assess the asset value of Bibiyana, Jalalabad and Moulavibazar fields, 33 per cent shareholding of which belongs to Chevron and the rest to the government.

At that meeting, the policymakers told the bureaucrats that the government would buy Chevron’s shares at the market price and some banks were ready to lend the money. They said it was time to make preparations to take over the assets.

As per Wood Mackenzie’s assessment, the value of gas at three fields—after evaluating production reports, which include gas pressure of all the wells at three fields—the gas reserves could be 3.5 trillion cubic feet (TCF) at 90 per cent probability. The value could be USD 1.9 billion if the gas price is USD 2.76 per unit, which Chevron is taking right now. If the 50-50 per cent probability is counted, the gas reserves would be 3.9 to 4.5 TCF, and the value would be more than USD 2 billion.

As per the production sharing contract (PSC), Bangladesh will get 67 per cent free gas, with a value of USD 7 billion, till 2034. This could be lost if Petrobangla takes over the assets, because the government would have to manage all costs, including those related to the operations and development of the fields.

“As Bibiyana is one of the largest fields, Petrobangla will not able to handle the operations. Not only that, corruption in the public sector is well known—that could eat up the profits,” said an energy sector official.

After discussing the issue, the government’s top brass instructed Wood Mackenzie to finalise its report.

“We will do whatever is necessary to get the Chevron’s assets at any cost. But before that, we should have the final report of Wood Mackenzie,” said a government official. On July 19, the first meeting between Petrobangla and Chevron was held at Dhaka, in which deep concern was conveyed to Chevron’s officials. The government wanted all documents to be submitted to Petrobangla as soon as possible on the asset sales. But no document has been submitted to the government yet, sources told The Independent.

The US energy giant has not yet disclosed the asset value it has received from the Chinese consortium.

“The sale of gas fields in Bangladesh involves some geopolitics,” said a government official.

This Chinese consortium is owned by China ZhenHua Oil Co. and CNIC Corporation Ltd.

On October 14 last year, Nasrul Hamid, the state minister for power, energy, and mineral resources, had told the media that the Bangladesh government had offered to buy all the natural gas assets of Chevron in Bangladesh. “We are interested in buying the assets. It will be a big opportunity for us to have access to the entire production of the three gas fields,” he had said.

But Chevron did not respond to the interest evinced by the government, and instead handed over its shares to the Chinese companies.

Referring to a letter to Chevron, the government official said as per the production sharing contract (PSC), the US oil giant would have to take permission for transfer of shares to the Chinese companies, but it has not applied for any such transfer yet.

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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