ChevronTexaco leaves Bangladesh in protest

Vol 7, PW 14 (24 Sep 03) People & Policy

Uncertainty in Bangladesh over gas exports to India has claimed its second victim in as many months.

On 16th September ChevronTexaco submitted a letter to energy minister Mosharraf Hossain in Dhaka telling him of the company's decision to abandon the Bangladesh upstream sector. ChevronTexaco is the second global oil major to quit Bangladesh over Dhaka's refusal to permit gas exports to India.

Last month, Shell sold all its Bangladesh upstream assets to Cairn Energy for the same reason. ChevronTexaco sold its 60% stake in Block 9, a "highly prospective" onshore Tullow Oil-operated 6,880-sq km block that includes the capital Dhaka, to Canada's Niko Resources.

On 17th September, both ChevronTexaco and Niko issued statements confirming the development. Neither company disclosed financial details.

A copy of the ChevronTexaco letter was also submitted to state-owned Petrobangla. PETROWATCH learns the letter was scathing in its criticism of Dhaka.

"Chevron said it is trimming operations where market prospects are bleak," a source in Petrobangla tells us. Red tape and "overall poor governance" were also listed as reasons behind the ChevronTexaco pull-out.

With Shell and ChevronTexaco out, Unocal is the only global major left in Bangladesh. But patience at Unocal might too be wearing thin.

A Bangladesh upstream sector official expresses shock and surprise at the ChevronTexaco decision. "We had heard ChevronTexaco might sell a part of its stake to Niko," he tells us.

"But we were not prepared for a total sell-out." Dhaka is putting on a brave face but privately admits that the Chevron move is a blow to the country's image. "Relevant clauses in the PSC permit ChevronTexaco to sell its shares to another party," we are told.

"But the government also has the right to judge whether the new company is qualified for this operation or not. And this unilateral decision will now be scrutinised by legal experts before we accept it." Niko was one of the original bidders for Block 9, but was disqualified on both financial and technical grounds.

Our Dhaka source concedes that more foreign companies may follow Shell and ChevronTexaco, "unless you allow them to make limited gas exports, so that they can get some returns on their investments and justify their position in Bangladesh."