The International Centre for Settlement of Investment Disputes (ICSID) barred Canadian Niko Resources from selling its Bangladesh assets without consent of state-owned Petrobangla and the government, a senior official said.
The Washington-based ICSID also tagged the Niko's plea of getting payment against gas sales from the Feni field with settlement of the compensation dispute over the Tengratila gas field blowouts, Petrobangla Secretary Md Imam Hossain told the FE.
The ICSID in a provisional order that reached the Petrobangla Sunday directed that the Niko would not be able to sell its assets directly or indirectly until disposal of the money suit and without the consent of the Petrobangla and the Bangladesh government, he said spelling out the ICSID verdict.
"The ICSID's provisional order came in our favour," Petrobangla Chairman Hussain Monsur said.
He said the order paved the way for settling the disputed issues with the Niko Resources in a local court.
A senior Petrobangla official said the dispute between the Petrobangla and the Canadian company surfaced when the Niko Resources started supplying natural gas from the Feni field without signing any agreement in November 2004.
And the two consecutive gas field blowouts in the Niko-operated Chhatak field in northern Bangladesh, locally known as Tengratila, in January and June 2005 further complicated the issues.
Initially, the Niko Resources wanted $2.35 per unit (1,000 cubic feet), but finally agreed to $ 1.75 per unit for gas from the Feni field after the gas field blowouts.
The Niko signed the gas sales and purchase agreement in December 2006 two years after starting production following wrangling with the government over gas pricing.
After the blowouts, the government took the Niko to a local court demanding Taka 7.46 billion ($106 million) as compensation for damages from the Tengratila gas field blowouts. The case is still pending with the court.
A Bangladesh law firm also started a public interest litigation against the Niko and subsequently got an injunction order that barred the government from paying gas bills to the company until the compensation issue was settled.
The Niko in 2009 had filed a petition with the High Court seeking payment for its gas bills.
But the court upheld the lower court verdict and directed the government to refrain from making any payment to the Niko until the case lodged by the government was resolved.
Failing to settle the issue in the local court, the Canadian company later moved to the ICSID and lodged an arbitration suit with it to settle the dispute over payment for gas sales from the Feni field and the compensation issue for Tengratila gas field blowouts in Bangladesh.
The Niko Resources had stopped supplying gas from its producing onshore Feni gas field in May 2010 over non-payment of US$27 million as dues for gas sales a week after it lodged an arbitration suit with the ICSID.
The Niko had stopped supplying gas from Feni after rejecting a Petrobangla request to continue production from the 43 sq km onshore gas field located some 100 km from the capital Dhaka.
The Canadian firm also had rejected a government proposal to settle the dispute through bilateral discussion considering mutual interest before going to the ICSID.
It got payments to the tune of around $4 million from the Petrobangla against gas bills for Feni gas before the court order barred payments.
The Niko had been supplying gas from the field since November 2004 except for nine days in early 2006, also over pending gas bills.
Before the latest stoppage of production, the Niko was supplying just 2.0 million cubic feet per day (mmcfd) of gas much below the initial supply of around 35 mmcfd during 2006.
The Niko Resources attained operatorship of the Feni field under the terms of a 2003 joint venture agreement (JVA) with state-run Bangladesh Petroleum Exploration and Production Company (Bapex), which gave it an 80 per cent stake.
The remaining 20 per cent stake went to the Bapex. The company also had attained exploration rights over three onshore gas fields-Feni, Chhatak and Kamta-following the JVA as the fields were declared 'abandoned' by Petrobangla.
The Niko succeeded in striking the JVA deal without any competitive bidding.
Apart from the JVA, Niko along with Singapore's KrisEnergy and Bapex is also involved in a production sharing contract for block 9 in Bangladesh, where KrisEnergy is the operator.
The Niko entered block 9 after purchasing stakes from the then Chevron and Texaco.
Currently the Niko has 60 per cent stakes in block 9 that produces around 110 mmcfd of gas from Bangura field, while 30 per cent including operatorship goes to Tullow and the remaining 10 per cent to Bapex.
