Ball starts rolling on dispute settlement

FE Team | Published: September 29, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

SM Jahangir
The arbitration process of settling the dispute over compensation for two blowouts, which took place at the Tengratila gas field in Sylhet, has finally begun between the Canadian company - Niko Resources Limited and Petrobangla.
Barrister Abdur Razzaq is taking part in the arbitration process on behalf of the state-run Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) while two lawyers - John Ridal and Ken Warn - would be representing Niko, sources said.
A meeting was held on September 22 between the two sides to determine the arbitration criteria for resolving the dispute over the compensation for the gas blowouts.
The first blowout took place on January 7, 2005 when Niko's drilling contractor reached a depth of nearly 800 metres. Niko had planned an investment of US$15 million for this well, sources said.
And the second blowout of a similar nature occurred on June 24 the same year while drilling a relief well to control the first blowout of the gas field.
According to sources, the Niko was able to bring the blowouts under control in October 2005 by drilling the relief well at a cost of US$ 75 million.
In December 2005, the Petrobangla had sent a report to the Niko, demanding compensation regarding the losses to the national gas and other environmental damages following the blowouts.
It was said in the report that the country lost over three billion cubic feet (bcf) of gas in the blowouts, the sources said.
The Petrobangla also said that the Niko would supply the same volume of natural gas free of cost to the corporation.
An investigation committee also reported that about 45 bcf out of the total gas reserves of the Tengratila gas field was burnt out due to the incidents.
Referring to the Department of Environment, the Petrobangla also demanded over Tk 845 million as compensation for the environmental damages from the Niko.
However, the Canadian Oil and gas company - Niko - had formally questioned to the authenticity of such claim, sources said.
After holding a series of discussions on the issue, Niko formally made a request to the government for resolving the matter in a transparent manner.
The Petrobangla agreed in last March to settle the dispute with the Niko through arbitration.
Meanwhile, considering the country's prevailing gas crisis, the Niko had started supplying gas from its Feni field without signing any gas sales agreement with the government, source said.
But the company did not get its due gas prices from the government even after signing such agreement with it, they mentioned.
The company has so far received US$ 4.0 million in two installments from the government against its outstanding dues amounting to US$ 23 million.
Due to the non-payment of its outstanding gas bills by the government, the Niko is unable to go for further investment into its Feni gas field for raising its production by 30 million cubit feet per day, which will help resolve the current gas crisis in the Chittagong region, the company sources said.