A Chevron gas station sign is seen in Del Mar, California, in this April 25, 2013. (Reuters)
China's state-run Zhenhua Oil has signed a preliminary deal with Chevron to buy the US oil major's natural gas fields in Bangladesh that are worth about $2 billion, two Beijing-based Chinese oil executives told Reuters.
“We can confirm that Chevron has been in commercial discussions about our interests in Bangladesh,” Cameron Van Ast, spokesperson of Chevron told WION. Ast refused to comment on the negotiations currently underway.
Chevron had rolled out plans in October 2015 to sell off assets worth $10 billion by 2017 including its geothermal projects in Indonesia and gas fields in Bangladesh. The sellout takes place amid a prolonged slump in prices of energy.
In Bangladesh, Chevron has been operating three gas fields in Bibiyana, Jalalabad and Moulvi Bazar, which produce more than half of Bangladesh’s total gas output.
Zhenhua is a subsidiary of China's defence industry conglomerate NORINCO. A completed deal would mark China's first major energy investment in the South Asian country, where Beijing is competing with New Delhi and Tokyo for influence.
Bangladesh, though, holds the right of first refusal on the assets and could block the transaction. The country, via its national oil company Petrobangla, is keen to buy the gas fields and is talking to international banks to raise financing, according to a banking source familiar with the process.
Bangladesh is in the process of hiring global energy consultant Wood Mackenzie to assess the fields’ reserves before placing a formal bid to buy the assets, two Bangladesh sources familiar with the matter told Reuters.
The Bangladesh sources said they were not aware of Zhenhua Oil’s competing interest in the Chevron fields.
While Chevron has been operating on gas fields onshore, Bangladesh in 2014 acquired 118,813 square kilometres of sea area at the Bay of Bengal comprising of 23 offshore blocks.
(WION with inputs from Reuters)