Petrobangla puts Chevron on GTCL's system

Petrobangla yesterday approved a move allowing US oil company Chevron install a gas compressor station at Muchai in the gas pipeline owned by the national Gas Transmission Company Ltd (GTCL).
Petrobangla had earlier asked Chevron to install this compressor to boost gas supply pressure and volume late last year when GTCL was processing a tender for the same under a loan from Asian Development Bank (ADB).
The GTCL's tender was opened in February, and in May the GTCL board headed by Petrobangla chairman Maj (retd) M Muktadir Ali cancelled the tender. Ali had earlier pushed Chevron for the job last year.
Chevron will install the compressor station under a the Production Sharing Contract (PSC) for block 15 signed with Petrobangla at a project cost of US$ 52 million. This cost would be recovered from gas sales from the block.
As there is no legal instrument allowing a private company to work in GTCL's system, Chevron is expected to sign a partnership contract with the GTCL, sources said.
“The compression project will be implemented within the terms and conditions of the PSC. Upon completion of the work and cost-recovery, the compressor will be handed over to the custody and jurisdiction of GTCL,” a Chevron official said, on condition of anonymity.
“All operative gas fields in the north-eastern parts of the country could produce more gas. However, pressure constraints in the north-east to south-west gas pipeline prevent that from being possible without additional compression."
"Adding compression to key parts of the system will help alleviate and circumvent that constraint,” the official explained.
He pointed out that the compressor station would serve to increase gas transmission capacity with respect to both throughput and pressure of the existing 24” north-south and 30” Muchai-Ashuganj gas transmission pipeline.
Chevron's compressor station project cost is US$ 12 million higher than the cost proposed by Korean company Hyundai in the cancelled GTCL tender.
Some officials say that the country's law and the PSC do not allow Chevron to operate within the GTCL system. But on June 11, Petrobangla Chairman in a letter to the ministry seeking permission on this deal said that Article 15 of the PSC accommodates Chevron's installation of compressor.
Earlier, Petrobangla very oddly invited Chevron representatives to a meeting between Petrobangla and ADB to discuss future loans for compressors.
At the meeting, the ADB team promised a US$ 350m loan for a national gas access improvement project. Under this loan, ADB would provide US$ 100 m for two compressors, as suggested by the chairman.
The Chairman argued that Chevron has recovered their work cost from Jalalabad, Moulavibazar and Bibiyana gas fields, and those fields now supply gas worth US$ 28 to 30 m per month. After the compressor is installed, and Chevron recovers its investment from sales, the income from gas sales would be an additional US$ 2.5 to 3 million each month.
Meanwhile, Petrobangla has granted Chevron Bangladesh Blocks 13 and 14 Ltd permission to conduct a 3D seismic survey approximately 135 square kilometres beyond the current ring fence, in order to better understand the size of the Jalalabad field.
This expansion of the concession area will include a portion of Block 13, which was earlier relinquished by Chevron.
Jalalabad field is playing a pivotal role in supporting Petrobangla meet the current energy need of the country. The purpose of the seismic survey is to ascertain whether the field has additional production capacity.