BD buyout of Chevron assets likely by outbidding China

Dhaka,  Tue,  25 July 2017
Published : 04 Jul 2017, 23:13:12
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BD buyout of Chevron assets likely by outbidding China

Govt gets foreign consultancy Mackenzie’s valuation report
M Azizur Rahman


Globally reputed consultancy Wood Mackenzie has submitted an asset-valuation report on Chevron Bangladesh to facilitate government decision on possible buyout of the US firm's stake, officials said.

It happens to be a preemptive move by government's one energy corporation to purchase the international oil major's operations in Bangladesh's hydrocarbon turf. Chevron management has already negotiated the selloff of its Bangladesh operations to China.           

"We got the report of Wood Mackenzie last week…expecting to reach a decision on purchase of the US firm's stake after evaluation," Petrobangla chairman Abul Mansur Md Faizullah told the FE Monday.

The Scottish consulting firm submitted a 'draft' report elaborating on different aspects on Chevron Bangladesh's assets and liabilities, said a senior official of the state-run Bangladesh Gas Fields Company Ltd (BGFCL).

Petrobangla's wholly owned subsidiary company, BGFCL had assigned Wood Mackenzie to the job of valuating assets of Chevron Bangladesh immediate after the April 24 announcement of the firm on its agreement to sell off its three upstream natural gas-producing fields in Bangladesh to a Chinese joint-venture company -- Himalaya Energy.

The JV consists of China ZhenHua Oil, a state-owned oil company specializing in oil and gas exploration and production, trading and refining, and CNIC Corporation, a Hong Kong-based investment corporation focused in oil and gas, infrastructure, natural resources and advanced technology industries.

Petrobangla had immediately shown interest in purchasing Chevron's stakes in Bangladesh after evaluating its assets and liabilities, which include the remaining reserves in the three operational onshore gas fields, condition of the fields, and its overall liabilities.

The state-owned petroleum firm (Petrobangla) is yet to approve Chevron's sale of Bangladesh stakes to the Chinese buyer as the US firm has yet to apply for the go-ahead for the asset transfer that requires approval from Petrobangla, said Mr Faizullah.

According to the production-sharing contract, Chevron holds the right to transfer its shares to any buyer, but in order for the transfer to take effect, the US firm is required to get the Petrobangla nod.

On completion of evaluation of Wood Mackenzie's asset valuation, Petrobangla would decide as to whether it would purchase Chevron Bangladesh's stakes or allow the US firm to sell stakes to the Chinese JV.

A government decision over the issue would also be required before taking the decision on the multinational matter.

Chevron currently produces around 53 per cent of Bangladesh's total natural gas output, amounting to around 1,458 million cubic feet per day (mmcfd), from three onshore fields, according to Petrobangla data.

The three major gas-producing fields are Bibiyana, Jalalabad and Moulavi Bazar.

Petrobangla has been looking at Chevron's transaction very closely as country's energy security depends on it because closure of the fields even for a day would have "disastrous" consequences for the country, said a senior official of the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR).

A one-day maintenance work of Bibiyana gas field on June 29, which coincided with the countrywide vacation on Eid-ul-Fitr, one of the largest religious festivals of Muslims, had hit badly the overall natural  gas production and supply across the country, he cited as an example to justify the buyout move.

The EMRD had to arrange immediate rationing of gas to gas-guzzling industries and power plants to make do with the available output.

Transport sector was worst affected as the government had asked the CNG stations to shut down for 24 hours.

The country currently suffers from a chronic gas shortage of around 600 mmcfd, which has resulted in the rationing of supply to industries, power plants and fertiliser factories.

Additionally, there has been a suspension of new piped gas connections to commercial and household consumers.

Azizjst@yahoo.com
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