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Steve N Wilson took over as President of Chevron Bangladesh only five months back. Previously he had been in Nigeria as General Manager of Chevron Nigeria. In an interview with the Energy & Power, he shared his experiences both in Nigeria and Bangladesh, elaborated on Chevron Bangladesh’s present activities and future plans. He also talked about some critical issues of the energy sector of Bangladesh.
The EP Editor Mollah Amzad Hossain took the interview. Following are the excerpts:
EP: In energy sector of Bangladesh, the name of Nigeria is mentioned on many occasions. You served in the African country for a long time. What’s your experience over there? How do you look at the oil and gas sector of Nigeria?
Wilson: Although there are some similarities between the two countries, there are also differences. There are a larger number of international energy companies working in Nigeria as the hydrocarbon reserve base of oil and gas there is huge, and widely-explored. Bangladesh, by comparison, is a country rich in gas, yet with the potential for significantly more exploration to find additional prospects. From a perspective of resource potential, Nigeria is a very appealing destination for international investors, but it is a complex and challenging place to do business, particularly in the delta region.
EP: Chevron Bangladesh is the largest gas producing company in Bangladesh. What’s your feeling on assuming the new job here in Dhaka?
Wilson: I’m very excited to be here in Bangladesh and to have the opportunity to work in Asia where energy demand is expected to grow faster than anywhere in the world. I’m pleased to be now leading an operation, which has shown in the past how Chevron can operate safely, reliably and in an extraordinary environmentally-conscious manner. Two of our gas fields are located in the middle of commercial tea gardens, and the two enterprises co-exist and operate in complete harmony! My plans are to do business which not only benefits Chevron, but also helps the country and the people of Bangladesh. I am optimistic that we can not only continue to do a good job in our existing operations, including the giant Bibiyana gas field which we brought on stream earlier this year, but also to look for new opportunities which there may be in the country as well.
EP: Chevron is now producing gas from Jalalabad, Moulavibazar and Bibiyana gas fields. The block 7 also belongs to Chevron. We know that seismic survey has already been conducted. When will Chevron start exploration in block 7?
Wilson: Chevron is increasing its supply of natural gas to the region every year. The company’s production from its three gas fields in Bangladesh is now more than 30 percent of total gas consumption compared to approximately 20 percent in 2006. We are proud to be a reliable supplier and a good partner in business and in the communities where we operate.
We completed our contractual commitment of shooting one thousand kilometers of seismic last year on Block 7. We are currently processing the data and evaluating the results. We have enough interest to want to return to some areas of the block to conduct more in-depth studies, to have a better understanding of the resource potential. This could involve shooting some more seismic lines over specific areas next year to more clearly define and possibly mature enough prospects and be able to drill.
EP: Very often we see reports in Indian newspapers that Chevron Bangladesh is being sold out to an Indian company. What’s the reality?
Wilson: Chevron routinely does not comment on rumor or speculation about possible future investments and commercial activities. That said, we are very pleased with our Bangladesh operations and we have actually been growing our business in this region. As I mentioned previously, the company’s production from its three gas fields in Bangladesh has increased from 20 percent to 30 percent of total gas consumption in the past year. Chevron finds Asia a very attractive place for investment and we continue to look for opportunities to grow our portfolio in the region.
EP: There is a dispute between Chevron and Petrobangla over 4 percent wheeling charge. How does Chevron want to resolve the problem?
Wilson: I can only reinforce the fact that Chevron and Petrobangla endeavor to maximize benefits to both parties and to the people of Bangladesh by monetizing the energy resources in an effective manner, and the relationship is a good one. However, as in any relationship, sometimes there are disagreements on certain issues, and the 4 percent wheeling charge is one such instance. We sincerely hope and expect that this disagreement would be resolved in accordance with the Production Sharing Contract (PSC) we have in place which governs our operations. There are clear guidelines in the PSC on the course to be followed for dispute resolution.
EP: From your brief stay in Dhaka, how will you evaluate the relations between Petrobangla and Chevron?
Wilson: We place a lot of importance on this relationship and I would say that relations between Petrobangla and Chevron are “first class”. As President of Chevron Bangladesh, I have worked hard to establish very good relations with the Ministry and the highest levels with Petrobangla. At various levels of operations in Bangladesh, I hear nothing but positive feedback on how we interact with each other and work together for future energy supply reliability. The people of Bangladesh rely on the energy industry to help fuel economic growth in the country and we take our role in this very seriously. We pride ourselves on being a partner and employee of choice and we look forward to growing our positive relationship with Petrobangla, the government and the community.
EP: Bangladesh is planning for bidding for offshore exploration. Have you any plan to take part?
Wilson: As far as planning for offshore exploration, as I said before, Chevron does not comment on possible future investment activities, so it would be inappropriate for me to say at this point what our intentions are for the offshore licensing round. I will say that I see three aspects of the new bidding round that are important for the authorities to address: the technical aspect; commercial viability; and the legal framework.
From a technical perspective, we would need to carry out sufficient evaluation on the blocks to get a handle on our estimate of the offshore resource potential. In that regard we are in the process of buying seismic data from Petrobangla to assist in our technical evaluation. From the commercial perspective, we will need to be sure that the terms and conditions in the proposed Production Sharing Contract (PSC) associated with the Licensing Round will be encouraging for investors with no “show-stoppers”, and that the detailed commercial terms will allow a fair and equitable commercial return on any development, to encourage investments. We have yet to see what the Production Sharing Contract would look like. Finally, from a legal perspective, if we decide to take part in the licensing round, we will need to ensure there is willingness within the authorities to maintain sanctity of the contract which eventually defines the responsibilities of all signatories.
EP: Bangladesh is now in severe energy crisis. What’s your suggestion for more exploration of gas and coal in the country? Have you any suggestion for more private sector involvement in Bangladesh energy sector?
Wilson: It is not really appropriate for me to tell Bangladeshi investors or those in power how they should be managing their energy sector. What I can say now is that it would seem helpful to encourage investment if onshore acreages could be opened for further licensing, in addition to the offshore areas, to give the country as many options as possible. And for those areas which are to be opened, if speculative seismic is shot in advance, it helps to market and advertise license potentials.
And in keeping with what I said earlier, I think what would encourage more future private sector involvement is if the authorities are seen to be honoring international contracts which they have with existing international investors.
EP: Have you any plan to help BAPEX attaining more capacity for exploration and production?
Wilson: Right now we have no actual plans in place. However, Chevron is open to having such dialogue with BAPEX if the opportunity arose that would be of mutual benefit to both companies.
EP: Cross-border gas trade is very common in North America, Europe and ASEAN countries. Why are we, the SAARC countries, not succeeding? What do you think?
Wilson: There are some Asian countries where cross border gas trade is working and this is largely due to local demand outstripping supply. For instance, Indonesia and Malaysia both supply Singapore with piped gas and Myanmar supplies Thailand with natural gas from its offshore fields because domestic demand is only limited. In other locations there seems to be some long-standing differences which need to be resolved before cross-border energy trade becomes a possibility. In Bangladesh at the present time, there is a rapidly-growing need for gas in the domestic market and this is probably the most compelling priority for Bangladesh right now.
EP: The government is planning to set up a 450MW power plant at Bibiyana. What’s your plan in this regard?
Wilson: Chevron Bangladesh is working closely with Chevron Global Power Company to evaluate opportunities to enter the Bangladesh power sector. Chevron brings years of experience and deep knowledge of power generation and power markets to this vital link in the energy value chain.
As you are no doubt aware, we have submitted a pre-qualification document and we are looking forward to being a part of the process and hopefully Chevron will be successful in its efforts. If Bibiyana gas is sold to a Bibiyana IPP, and if it improves the outlook for power in the country, we will only be demonstrating that we are a reliable partner of the people of this country.
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