Govt wins int'l arbitration suit filed by Chevron

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M Azizur Rahman
The government has won an international arbitration suit, having a cumulative worth of at least US$ 500 million, by the US Chevron over the long-pending payment dispute for carrying gas to national gas grid, top officials said Tuesday.
The International Centre for Settlement of Investment Disputes (ICSID) on Monday's verdict has rejected Chevron Bangladesh's demand for refunding the wheeling charge that Petrobangla used to deduct from its gas bills.
"The ICSID ruling also cleared the way for state-owned Petrobangla to continue deduction of wheeling charge at 4.0 per cent from Chevron's future gas bills the cumulative worth of which would be more than $500 million," Petrobangla top official M Muqtadir Ali told the FE.
The three-member ICSID tribunal with Thomas Buergenthal of US as President and John Beechey of UK and Fali S Nariman of India as arbitrators unanimously turned down the Chevron's pleas.
"The tribunal rejects the claimant's (Chevron Bangladesh) claims on the merit," the ICSID verdict spelled out.
The ICSID Secretary General Meg Kinnear sent a certified copy of its verdict to Bangladesh lawyer dated Monday.
When contacted a senior Chevron official said: "Chevron is reviewing the decision of ICSID and expects to reach a decision tomorrow."
Chevron Bangladesh lodged the suit with the ICSID in June 2006 demanding refund of the wheeling charge claiming that Petrobangla had been illogically deducting 4.0 per cent of its total gas bills as wheeling charge.
But Bangladesh moved to ICSID first to challenge Chevron's claim in July 2008 after appointing eminent lawyer Dr Kamal Hossain and associates to represent the country in the arbitration.
The caretaker government in 2008 also withdrew a case that Petrobangla had filed against Chevron with a Dhaka court in April 2007 seeking injunction on Chevron's move of going to ICSID.
Petrobangla deducted around $49 million until 2008 before going to ICSID.
This payment goes to state-owned Gas Transmission Company Limited (GTCL), a subsidiary of Petrobangla.
Chevron in its suit had argued that the 4.0 per cent wheeling charge is applicable only if it used Petrobangla's pipeline to supply gas to other parties, while Petrobangla said the deduction was in accordance with the gas purchase and sales agreement (GPSA) under the production sharing contract (PSC).
Chevron is the country's biggest gas provider with its supply hovering around 900 million cubic feet per day (mmcfd), around half of the total production of around 1950 mmcfd.