UPDATE 1-Chevron invests $500 mln to lift Bangladesh gas output

DHAKA/SINGAPORE, July 30 (Reuters) - Chevron Corp will invest about $500 million to raise its natural gas production in Bangladesh by more than a quarter in 2014 to meet rising local demand, the company said on Monday.

With the investment, Chevron will remain the largest natural gas producer in Bangladesh, which currently faces up to 500 million cubic feet a day (mmcfd) of gas shortages.

"This project will provide more affordable energy that will not only increase Chevron's business in Bangladesh but also help drive economic growth and alleviate poverty for many millions of people," said Geoff Strong, president of Chevron in Bangladesh.

Chevron will expand a plant to process more natural gas from the Bibiyana field, drill additional development wells and build an enhanced gas liquids recovery unit, the company said in a statement.

The project, when completed in 2014, will boost Chevron's total natural gas production capacity in Bangladesh by more than 300 mmcfd to 1.4 billion cubic feet per day while its condensate output will rise by 4,000 barrels per day, the company said.

"Production of this condensate will save the import of liquid fuels with a current market value of about $200 million per year," Strong said at a media briefing.

At present Chevron is the largest producer of natural gas in Bangladesh as it supplies over 50 percent of total need in the country with peak production rates over 1.1 billion cubic feet per day.

"It is a combined effort to make a significant difference to help solve the energy crisis in Bangladesh," said Tawfiq-e-Elahi Chowdhury, energy adviser to prime minister Sheikh Hasina.

"If we can use natural gas for producing electricity then the price will be lower," he said.

Currently Bangladesh produces up to 55 percent of its electricity using natural gas to generate about 6000 megawatts of power.

Chevron has urged the Bangladesh government to upgrade its national pipeline network so that it can deliver more gas.