Niko likely to go to int'l court to settle Feni gasfield dispute

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M Azizur Rahman
Canadian oil and gas explorer Niko is planning to lodge suit with international court to settle the long-pending dispute over payments against gas sales from Feni field, officials said Tuesday.
Niko vice president Larry Fisher elaborated the company's view during a meeting with energy secretary Mohammad Mohsin last Sunday.
Mr Fisher, who is also the country manager of Niko Resources in Bangladesh, also proposed the government to jointly submit the suit with the Washington-based International Centre for Settlement of Investment Dispute (ICSID).
During the meeting the Niko official also sought to sign a fresh gas purchase and sales agreement (GPSA) with the state-owned Petrobangla as its GPSA on Feni gas expired last month.
"I told Niko officials to talk to Petrobangla in this connection," energy secretary told the FE.
Niko so far got US$4.0 million as bills for Feni gas, and its outstanding bill is around $40 million.
Payments against gas sales to Niko was stopped following a local court verdict ordering the government not to pay gas bills to the Canadian company until the compensation issue over two consecutive gasfield blowouts settled.
The blowouts took place in the Niko operated gasfield at Chhatak, locally named Tengratila, when the company was drilling there in January and June 2005.
After the blowouts the government lodged a suit with the local court demanding Tk 7.46 billion ($110 million) as compensation from Niko, which is still pending.
Local lawyers and a human rights organisation also filed a public litigation case against Niko and subsequently got judgment that barred the government from making payment of gas bills to Niko until the compensation issue was settled.
Niko last year filed a petition to High Court seeking payment of its gas bills, as the money would be invested for further exploration in Bangladesh.
But the High Court on Nov 17, 2009 upheld the local court's verdict and directed the government to refrain from making any payment to Niko until the settlement of the case.
The Canadian hydrocarbon exploration company has been supplying gas to Bangladesh from the Feni gasfield since November 2004. Though the initial production from Feni was over 30 million cubic feet per day (mmcfd), its current production is below two mmcfd.
Niko operates the Feni field under a joint venture agreement (JVA) with the state-run BAPEX in 2003. The company attained authority over three Bangladeshi gasfields - Feni, Chhatak and Kamta - following the JVA after showing that the fields were 'abandoned.'
Niko succeeded in striking the JVA without any competitive bidding. The country's top politicians and bureaucrats, however, faced graft charges during the previous caretaker government because of the Niko deal.