Amid Scramble for Influence, China Scoops Up Chevron’s Gas Fields in Bangladesh

China looks set to make its first big energy move in Bangladesh, as it competes with India and Japan for clout in the South Asian nation.

A Chinese consortium, composed of state firm China ZhenHua Oil and investment firm CNIC Corp, has made a deal with Chevron to buy its three gas fields, according to Reuters. Chevron’s holdings together produce 16 million metric tons of oil equivalent each year, coming to just over half of the South Asian nation’s gas output.

It’s the latest move by China in a battle for influence in the region. China and India have sought to curry favor with nearby countries through infrastructure projects and energy cooperation. In March, the Asian Infrastructure Investment Bank, a Chinese-led multilateral institution, approved $60 million in loans to help finance a gas project in Bangladesh which would help improve the country’s gas supply.  In the past two months, meanwhile, India and Bangladesh have reached several agreements in nuclear power cooperation. A planned coal power plant in Rampal would import Indian coal.

Japan, too, has gotten in on the game. In June 2016, it provided Bangladesh with a $1.5 billion loan package to fund several major projects, including a coal power plant and a rapid transit system in the capital Dhaka. In November 2016, Japan and Bangladesh created a petroleum sector joint venture firm.

China and India have near-insatiable energy appetites, making them dependent not just on foreign energy sources but also on shipping lanes in the Indian Ocean and the South China Sea. But China isn’t ready to pipe in gas from Bangladesh just yet. China and Myanmar just opened a cross-border crude oil and gas pipeline which runs between Myanmar and a refinery in Kunming, in China’s Southwest. But there is currently no gas pipeline in the works that would connect China to Bangladesh.

Meanwhile, Bangladesh is a net importer of petroleum products, and faces frequent energy shortages as its population continues to grow. Under its current agreement, Petrobangla, Bangladesh’s state energy firm, buys the output from Chevron’s fields. China seems likely to come to a similar arrangement.

Energy is just one area of big-power competition in Bangladesh. China, India, and Japan have tried to woo Bangladesh with competing proposals for deep sea port construction. China has previously pledged $9 billion to expand Bangladesh’s Chittagong port. There has also been talk of a Yunnan-Chittagong overland road, and of a grand intercontinental rail network connecting China to Europe through Myanmar, Bangladesh, India, Pakistan, Iran, and Turkey. But concrete proposals have yet to materialize.

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