Petrobangla is facing an international legal battle over charging huge gas wheeling fees from the US-based Chevron, amid the country's hisory of losing scores of arbitrations, officials and experts said.
But Petrobangla said it is upbeat about winning the legal battle as it has legitimately deducted 4.0 per cent as gas transmission charges from the bills it paid to the second biggest American oil company.
The London-based International Centre for Settlement of Investment Disputes (ICSID), an autonomus global body, will again hear the arbitration suit filed by Chevron on May 18 to resolve the fierce spat between Petrobangla and Chevron.
The hearing was to take place in last Decemeber but was deferred to May at the behest of Chevron, which lodged the case with the London-based Centre in a bid to get back millions of dollars in charges it paid out to Petrobangla for the Jalalabad Gas Field.
"We're hopeful about winning the legal battle," Petrobangla Director Md Muqtadir Ali said last week.
"Our claim is genuine. The company had paid transmission chrages for 45 months, then discontinued arbitrarily. We're fighting the battle in the light of PSC (production sharing contract)," he added.
A Petrobangla official said the hearing of the arbitration was originally scheduled for December, but the ICSID deferred the hearing to May 18 following a Chevron's appeal.
No Chevron official was immediately available for comments.
Bangladesh unit of San Ramon, which is a major international oil company, produces around 40 per cent of total gas output in the country. Its output ranges from 600 to 700 mmcf a day.
The government in July last took decision to face the arbitration suit lodged by the Chevron with the ICSID, refusing to refund 4.0 per cent of the gas sale proceeds from the Jalalabad field it had paid to Petrobangla, in wheeling charge worth millions of dollars over the years.
Petrobangla said it deducts tariff from the gas bills it pays to Chevron according to the accord that allows the company to pay the wheeling charge for supplying gas to domestic users.
"We've done our homework and already submitted our proceedings through our legal adviser. It's a matter of time now to get the verdict," the Petrobangla director said.
But critics remained unconvinced, saying the government has lost more than two dozens of international arbitrations since its independence.
The Rural Power Company Limited was the last government-owned agency to lose in the arbitration with the now-defunct Lehman Brothers, they said.
Mr Ali said he has no idea about it.
Petrobangla officials estimated that if it lost the battle, it would have to refund more than $ 40 million to Chevron, an amount it deducted as wheeling charge.
The government in July last decided to face the arbitration suit and withdraw a case it had filed against Chevron with a Dhaka court in 2006, seeking injunction on the Chevron's move to go to the global dispute settlement centre.
The two-way row erupted in 2005 when Chevron declined to pay out to Petrobangla any more, saying charges could be applicable if it used Petrobangla's pipeline to supply gas to other parties. Chevron has been supplying gas from three gas fields--Jalalabad, Moulvibazar and Bibiyana--only to Petrobangla, it added.
The gas reserve of the three fields is estimated at around 6.0 trillion cubic feet.
