Petrobangla decides to fight Niko in international tribunal

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M Azizur Rahman
The government has decided to fight the Canadian Niko Resources in the International Centre for Settlement of Investment Disputes (ICSID) tribunal on payment against gas sales and compensation disputes, top government officials said Monday.
"We certainly are going to contest Niko in the ICSID on non-payment and compensation issues," state-owned Petrobangla chairman Dr Hossain Monsur told the FE.
Eminent lawyer Dr Kamal Hossain, who helped Petrobangla win Chevron's case in Washington-based ICSID last week, might be appointed besides another lawyer as his deputy to fight Niko in ICSID, said the Petrobangla chairman.
Niko has lodged an arbitration suit with the ICSID against Petrobangla about a month back and subsequently stopped supplying gas from its Feni field over the row of non-payments against gas sales.
Petrobangla's landmark win over Chevron, having cumulative worth around US$ 400 million, has inspired the corporation to challenge Niko in the ICSID, said a Petrobangla official.
An ICSID tribunal last week turned down US Chevron's claim over payments for moving natural gas to Bangladesh's national grid.
Chevron Bangladesh had lodged the suit with the ICSID against Bangladesh 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 in the name of wheeling charge.
Bangladesh moved to ICSID in July 2008, two years after filing of case by Chevron, challenging the US company's claim saying the deduction was fair, logical and in line with gas purchase and sales agreement (GPSA).
"But this time we will not delay our move to contest the Niko suit in the ICSID," the Petrobangla official added.
Before stopping supply in early this month, Niko had been supplying gas from Feni field since November 2004 also over pending gas bills.
Niko was supplying around 2.0 million cubic feet per day (mmcfd) of gas daily, down from 35 mmcfd in the initial years of production.
Officials said the seeds of the latest dispute were sown right at the beginning when the Canadian company began supplying gas from Feni field without signing any agreement with the government 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 matters.
Initially, Niko Resources wanted $2.35 per unit (1,000 cubic feet), but finally agreed to $1.75 for gas extracted from the Feni field after the blowouts.
Niko signed the gas sales and purchase agreement in December 2006 two years after starting production following disagreements with the government over gas price.
After the blowouts the government took Niko to a local court demanding Taka 7.46 billion ($110 million) as compensation against the Tengratila gas field blowouts. The case is still pending with the court.