After Petrobangla finally paid its long-overdue $237 million, U.S. energy company Chevron has officially confirmed the restart of work at the Jalalabad Compression Project in Sylhet.
Project Set to Boost Gas Production
The much-awaited project is expected to increase gas output from the Jalalabad gas field to 352,000 million cubic feet (MMcf). This would help ease the ongoing gas crisis in the country.
Project Was on Hold for Over a Year
Chevron had originally committed to invest $65 million in the project. However, due to unpaid bills from Petrobangla, the company halted operations for more than a year.
By August 2024, the total dues reached over $237.55 million, which Petrobangla finally paid on April 21, 2025.
Read More: JU Business Dean Resigns Amid Student Protests
Chevron Confirms Restart After Full Payment
In a letter sent on June 22, Chevron Bangladesh President Eric M. Walker confirmed that the project will now move forward, as the long-standing payment dispute has been resolved.
He mentioned that Chevron is encouraged by the payment and ready to resume operations.
Delay Penalty of $26 Million Still Unpaid
Although the main dues were cleared, $26 million in late payment penalties still remains unpaid. The delay was partly due to the global discontinuation of LIBOR (London Interbank Offered Rate) in 2024 and the switch to a new standard called SOFR (Secured Overnight Financing Rate).
Because the original Production Sharing Contract (PSC) only referred to LIBOR, Petrobangla was unable to pay the penalty earlier.
Contract Amended to Allow Penalty Payment
To solve this issue, Petrobangla amended the PSC on June 22, allowing the penalty to be calculated using SOFR.
Director AKM Mizanur Rahman said that with the changes made, the $26 million penalty will be paid by July 2025.
Chevron Warns Future Payments Must Be Timely
Chevron also made it clear that the future of the Jalalabad project does not depend only on the penalty payment.
Petrobangla must also ensure that all monthly bills for gas and condensate are paid on time, and the full penalty amount must be cleared by September 30, 2025.
In the letter, Walker emphasized:
“Please note, the continuation of this project depends on timely monthly payments and the complete settlement of the delay penalty.”
Chevron’s Contract Runs Until 2038
Chevron has a production sharing agreement with Petrobangla that runs until 2038. During the 2023–24 fiscal year, the Jalalabad field produced an average of 160.82 MMcf of gas per day.
Project Will Help Tackle Gas Shortage
Once completed, the new compression project will boost gas production and help reduce the country’s gas shortage.
According to Petrobangla’s estimate, it will take around three more years to complete the project, though it was originally planned to finish by 2025.
Mizanur Rahman added:
“We are pushing Chevron to finish the work as fast as possible, considering the gas situation in the country.”
Source: TBS
