London, UK | – Chevron Corporation is selling its three Bangladesh gas fields, worth an estimated $2 billion, to a Chinese consortium as the U.S. 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 Beijing is pumping in billions of dollars in a race with New Delhi and Tokyo for influence.
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 state-owned China ZhenHua Oil and investment firm CNIC Corporation.
CNIC, set up in Hong Kong in 2012, is a government investment platform that focuses on supporting Chinese companies’ overseas investment.
Reuters reported in February that ZhenHua Oil had signed a preliminary deal with Chevron to buy the Bangladesh natural gas fields.
“The agreement is for the sale of Chevron’s Bangladesh companies, which hold our interests in Bangladesh,” a company spokesman told Reuters by email on Monday. “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 tonnes 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.
Bangladesh’s junior minister for power and energy, Nasrul Hamid, said that 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 told Reuters. “We believe that Chevron would honour our request.”
The Chevron spokesman said that 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, or liquid hydrocarbon produced with gas.
Chevron said in October 2015 that it planned to sell assets worth about $10 billion by 2017, including the Bangladesh gas fields and geothermal projects in Indonesia and the Philippines, amid a prolonged slump in energy prices.