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April 25, 2017

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Chevron sells gas fields to Chinese

CHEVRON Corp is selling its three Bangladesh gas fields, worth an estimated US$2 billion, to a Chinese consortium as the US oil and gas group looks to shed non-core assets this year.

The deal, if completed, would mark China’s first major energy investment in the South Asian country, where China is pumping in billions of dollars.

The gas fields, which account for more than half of the total gas output in Bangladesh, are being sold to Himalaya Energy, Chevron said. Himalaya is owned by a consortium comprising China Zhenhua Oil and investment firm CNIC Corp.

CNIC, set up in Hong Kong in 2012, is a government investment platform that focuses on supporting Chinese firms’ overseas investment.

“The agreement is for the sale of Chevron’s Bangladesh companies, which hold our interests in Bangladesh,” a company spokesman said by e-mail yesterday. “The value of the transaction is not being disclosed, and we are not at liberty to share the details of the agreement.”

A Zhenhua spokesperson confirmed the agreement, adding that the closing of the deal would depend on approval from China’s Ministry of Commerce.

Chevron sells its entire output from the Bangladesh fields — 16 million tons a year of oil equivalent — to state oil company Petrobangla under a production-sharing contract.

The Bangladesh government has the right of first refusal in any asset sale.

Nasrul Hamid, Bangladesh’s junior minister for power and energy, said energy consultant Wood Mackenzie is still evaluating whether it would be profitable for the country to make a bid.

“We can’t take any decision hastily until we get the consultancy report,” Hamid said. “We believe that Chevron would honor our request.”

The Chevron spokesman said the Bangladesh government is “critical to the ongoing success of the business, including the transition to the new owner,” and that it would maintain continuous communication with Dhaka as the process progresses.

The gas fields — Bibiyana, Jalalabad and Moulavi Bazar — had average net daily output of 720 million cubic feet of gas and 3,000 barrels of condensate.


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