Chevron gives bid to Petrobangla

Originally posted in The Financial Express on 23 May 2022

Exploring new gas zones

The US-based oil and gas giant Chevron plans to develop further two onshore gas-fields and one onshore block in Bangladesh in a quest to discover new gas zones and supply gas from those to help mitigate the country’s mounting energy crisis.

Chevron Bangladesh has recently submitted an unsolicited proposal to the state-run Petrobangla to develop Rashidpur and Chhatak gas-fields and Block 11 areas – to carry out necessary survey and drilling of wells to produce gas, a senior Petrobangla official told the FE on Sunday.

Chevron, however, has not clarified whether it would develop the gas-fields and the block under production sharing contract (PSC) or under joint venture (JV) with the state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX).

Chevron has not yet disclosed its investment plan to develop new onshore areas for delineating hydrocarbon reserves. Petrobangla has not yet taken any decision on Chevron’s proposal, he added.

Rashidpur gas-field, owned by Petrobangla’s subsidiary Sylhet Gas Fields Ltd (SGFL), is producing around 44 million cubic feet per day (mmcfd) of natural gas from five producing gas wells against the overall production capacity of 60 mmcfd. Rashidpur also produces around 38 barrels of condensate every day.

Two consecutive gas-field blowouts in 2005 at Chhatak (west) gas-field, also known as Tengratila, during drilling by ‘controversial’ Canadian oil and gas exploration company – Niko Resources – led to suspension of developing the prospective Chhatak gas-field.

Niko was developing Chhatak gas-field along under a JV agreement (JVA) with BAPEX, having 80 per cent stake. The remaining 20 per cent stakes went to BAPEX.

Niko was the operator of Chhatak along with two other gas-fields – Feni and Kamta – under the JVA.

Bangladesh is now in a payment row with Niko following the Tengratila gas-field blowouts over compensation, which is still pending for final verdict by the International Centre for Settlement of Investment Dispute (ICSID).

Onshore Block 11 is one of the two blocks that were kept ring-fenced for development by BAPEX, said sources.

Officials said Chevron placed the proposal after carrying out ‘exploration study’ in 11 onshore blocks, fully or partially, to delineate new hydrocarbon prospects over the past couple of years.

Among the blocks 1, 2A, 2B, 3A, 3B, 8, 9, 11, 12, 13 and 14, which were studied by Chevron, a few are still vacant, or unexplored. Some blocks are owned by the state-run Bangladesh Gas Fields Company Ltd (BGFCL), some are owned by Sylhet Gas Fields Ltd (SGFL), and the remaining ones are Chevron’s.

During the study, Chevron attained access to relevant data and carried out study in reservoir ‘stratography’, and unconventional reservoir ‘facies’, said sources.

Chevron earlier submitted a work-plan including budget to Petrobangla for drilling Bibiyana-27 well.

The US firm recently attained a 60-square-kilometre ‘flank’ area from Petrobangla outside its existing contract zone at the north of the Bibiyana gas-field in gas-rich north-eastern region.

Petrobangla approved Chevron’s bid for extending its foothold on the sector.

Chevron has planned to drill several gas wells in the flank area, if its drilling of Bibiyana-27 well comes out successful.

Sources also said Chevron previously invested around US$500 million in Bibiyana gas plant expansion project during 2012-2015, which included a gas plant expansion, new development wells, and an enhanced liquid recovery unit.

In 2015, Chevron proposed to invest around $650 million for installing a new compression station at Bibiyana gas-field and drill three more wells at Jalalabad gas-field, tagging a condition of 3.0 per cent annual tariff hike for Bibiyana gas.

The US firm later dropped the investment plan, as Petrobangla rejected Chevron’s plea for annual hike of natural gas tariff.

Chevron instead announced to sell its Bangladesh stakes to Chinese JV Himalaya Energy in April 2017.

The US firm reversed its decision in October 2017, when Petrobangla moved to acquire its assets. It decided not to sell Bangladesh stakes, and stay here.

Chevron is currently the largest producer of natural gas in Bangladesh with its total output of around 1,445 mmcfd from three onshore fields – Bibiyana, Jalalabad and Moulvi Bazar, which are located in blocks 12, 13 and 14 respectively, according to Petrobangla.

The country’s overall natural gas output is hovering around 3,074 mmcfd, including 761 mmcfd of re-gasified liquefied natural gas (LNG). The remaining 2,313 mmcfd comes from local gas-fields, including the Chevron-operated ones.