* Defence-linked firm Zhenhua aims to finalise deal by June
* Deal would add 16 mln T oil equivalent to annual Zhenhua
* Bangladesh to pursue bid only if fields judged viable
(Adds detail, response from Chevron, Zhenhua, comments from
Bangladesh energy minister)
By Chen Aizhu and Ruma Paul
BEIJING/DHAKA, Feb 22 China's state-run Zhenhua
Oil has signed a preliminary deal with Chevron to buy
the U.S. oil major's natural gas fields in Bangladesh that are
worth about $2 billion, two Beijing-based Chinese oil executives
Zhenhua is a subsidiary of China's defence industry
conglomerate NORINCO. A completed deal would mark China's first
major energy investment in the South Asian country, where
Beijing is competing with New Delhi and Tokyo for influence.
Bangladesh, though, holds the right of first refusal on the
assets and could block the transaction. The country, via its
national oil company Petrobangla, is keen to buy the gas fields
and is talking to international banks to raise financing,
according to a banking source familiar with the process.
Bangladesh is in the process of hiring global energy
consultant Wood Mackenzie to assess the fields' reserves before
placing a formal bid to buy the assets, two Bangladesh sources
familiar with the matter told Reuters.
The Bangladesh sources said they were not aware of Zhenhua
Oil's competing interest in the Chevron fields.
"As this project is in the process of commercial
discussions, we can't comment based on our company policy," said
Zhang Xiaodi, Zhenhua Oil's spokesman.
Zhenhua Oil is a small oil and gas explorer that despite its
connections to China's defence industry is dwarfed in comparison
to state energy giants PetroChina and Sinopec
. It is trying to formalise its deal with Chevron by
June, after the two companies signed a preliminary pact in
January, the two senior oil executives told Reuters.
Zhenhua will partner with China Reform Holdings Corp Ltd, an
investment vehicle under the State-owned Assets Supervision and
Administration Commission (SASAC). Zhenhua will hold 60 percent
of the deal and China Reform 40 percent, the two executives
The executives declined to be named as these discussions
were not public.
Chevron, in an e-mailed statement, confirmed that it was in
commercial discussions on its Bangladesh assets, but would not
comment further as a matter of policy.
Chevron had said in October 2015 that it planned to sell
about $10 billion worth of assets by 2017 including geothermal
projects in Indonesia and the Philippines and gas fields in
Bangladesh amid a prolonged slump in energy prices.
Bangladesh knows that Chevron is in talk with global
companies, but has no specific knowledge about Zhenhua's
interest, said Nasrul Hamid, state minister for power, energy
and mineral resources.
"This is Chevron's matter. We'll not interrupt but we are
supposed to get the first priority," he said when asked if
Bangladesh would try to block the China deal.
"We will place a formal bid only if the project is viable,"
Chevron sells the entire output from its three gas fields -
Bibiyana, Jalalabad and Moulavi Bazar, which account for more
than half of Bangladesh's total gas output - to state energy
firm Petrobangla under a production sharing contract.
If the Bangladesh deal materializes, it would hand the
Chinese firm 16 million tonnes a year of oil equivalent output,
including both natural gas and condensate, a scale that would
make it China's fourth-largest oil and gas producer, the two
Chinese executives said.
(Reporting by Chen Aizhu in BEIJING and Ruma Paul in DHAKA;
Additional reporting by Anshuman Daga in SINGAPORE; Editing by