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Petrobangla mulls buy-up of Chevron assets, if divested

  • Published at 04:13 pm October 18th, 2016
  • Last updated at 04:17 pm October 18th, 2016
Petrobangla mulls buy-up of Chevron assets, if divested
Petrobangla's top officials Tuesday met to discuss whether or not to acquire the assets of three onshore gas fields currently held by Chevron Bangladesh. Chevron's gas fields account for half of Bangladesh's natural gas production. Bibiyana, Jalalabad and Moulvi Bazar fields, which may be put up for sale, are currently operated under a production sharing contract by the local subsidiary of US-based oil giant Chevron. Chevron Bangladesh officials, asking not to be named, told the Dhaka Tribune they feared they would lose their jobs if Chevron's assets were to be sold. The Petrobangla meeting was attended by its chairman, directors, two former directors, general managers and the managing director of the state oil and gas exploration company Bapex, a Petrobangla top official said, wishing not to be named.
Also Read- Chevron confirms discussion for potential Bangladesh sale
“Although Chevron has not officially informed Petrobangla about its decision to sell the three gas fields under its operation, a meeting was organised as per instructions from the Power, Energy and Mineral Resources Ministry,” the high official told the Dhaka Tribune. Describing the meeting as “over-excitement,” the official went on to say: “It is surprising that the ministry's top bosses are showing such interest in buying the gas fields even though Chevron has not yet formally informed the government or Petrobangla about the sale of the three fields. “They [Chevron] just issued a statement to the media.” State-owned Petrobangla is Chevron Bangladesh's sole customer of the gas produced at the three fields. The net daily production of the three fields averaged 1,510 mmcf of natural gas and 1,552 barrels of condensate, according to the Petrobangla website. Under the production sharing contract, Chevron is required to inform the government if it decides to sell its assets. During Tuesday's meeting, Petrobangla officials determined that the three fields have an additional proven and probable reserve of 2.5tn cubic feet (tcf) gas over the next 10 years. The Petrobangla meeting considered a possible valuation of $3bn for the assets. Chevron infographic But this was too high a price for the reserve, one Petrobangla official told the Dhaka Tribune. He said the valuation was based on an estimate and was just an initial valuation, adding that the government should appoint a consulting firm to make a valuation of the gas fields' assets. Petrobangla Chairman Istiaque Ahmad confirmed the meeting had taken place and is reported to have instructed his officials to discuss and examine the issue further. Responding to a question, Istiaque said the meeting had been held following a ministry order that came after news of Chevron's decision to offload its South Asian assets was reported in the media. The two former Petrobangla directors who attended the meeting as expert witnesses offered opposing opinions about the best course of action. One recently retired director told the Dhaka Tribune he was in favour of buying the assets, but added that a proper examination of the amount of gas likely to be recovered over the next decade would still have to be carried out. He said the price of operational tools and equipment would have to be fixed “rationally.” The other former director at the meeting said buying the assets would be unwise. [caption id="attachment_22985" align="aligncenter" width="487"]Map of Chevron interests in Bangladesh, as of now Chevron Bangladesh website  Map of Chevron interests in Bangladesh, as of now Chevron Bangladesh website [/caption] “Companies under Petrobangla do not have the technical and operational know-how to operate the gas fields under Chevron. Petrobangla cannot maintain the international quality that Chevron maintained,” he said. Attendees told the Dhaka Tribune that Tuesday's meeting was inconclusive. “A decision cannot be taken in a single meeting. We need to appoint an international consulting firm to study the issue and determine an appropriate response,” the Petrobangla chairman said. “The value of the assets and the three fields' extraction prospects have not yet been determined because if I appoint two firms, I will get two separate views and estimates,” he added. Several media outlets recently reported that Chevron is divesting its assets to counter an energy-price slump and would be seeking some $2bn from the sale of its natural gas assets in Bangladesh. “We can confirm that Chevron has been in commercial discussions about our interests in Bangladesh. At this stage, no decision has been made to sell our interests. We will only proceed if we can realise attractive value for Chevron,” Shaikh Jahidur Rahman, communications manager (External Affairs) of Chevron Bangladesh, told the Dhaka Tribune on Tuesday. He declined to comment on reports that local Chevron officials were anxious about job security in the event that the assets were sold off.
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