Fresh row with Niko looms
Tuesday, 2 February 2010
M Azizur Rahman
The government faces the risk of a fresh round of row with Niko as it is taking gas from the Canadian company operated Feni field for the last three months without any agreement, sources said.
The state-owned Petrobangla did not sign a fresh gas purchase and sales agreement (GPSA) with the Niko Resources after expiry of the previous accord on Feni gas in November 2009, a senior Petrobangla official said.
It had, however, asked Niko to continue production from the Feni gas field when the Canadian company intended to stop gas extraction, the official added.
"Signing of a fresh GPSA depends on the decision of government high-ups" said Petrobangla director of Production Sharing Contract Imad Uddin.
Meanwhile, Niko is not getting any payment for Feni gas due to an injunction issued by a local court that barred the government from making payment to the Canadian company following two blowouts in a gas field operated by Niko.
The company, however, planned to drag Petrobangla to the International Court of Justice to settle the long-standing dispute over payments against sales from the Feni gas field.
Niko backtracked following Petrobangla's assurance that it would try for an out-of-court settlement.
The company is now supplying a meager 2.0 million cubic feet per day (mmcfd) of gas to the national grid, when the country's total gas output is around 1980 mmcfd.
The Canadian oil and gas exploration company was initially supplying 35 mmcfd of gas from the Feni field, located some 150-kilometre off the capital.
The company initiated supplying gas from Feni field without signing any GPSA with the government in November 2004.
Niko signed the GPSA in December 2006 two years after starting production following wrangling with the government over gas pricing.
Initially, the Niko Resources was demanding US$ 2.35 per unit (1,000 cubic feet per day or 1 Mcf) but finally agreed to supply gas at $ 1.75 for per unit from the Feni field.
But two consecutive gas field blowouts at Chhatak in the northern region, locally known as Tengratila, in January and June 2005 strained its relationship with the government.
The government took the company to a local court demanding Tk 7.46 billion ($110 million) as compensation for damages from the gas field blowouts.
The case is still pending with the court.
A local law firm also brought public interest litigation against Niko and subsequently got an injunction order that barred the government from paying gas bills to the company until the compensation issue was settled.
Niko last year filed a petition with the High Court seeking payment of its gas bills.
But the court upheld the lower court verdict and directed the government to refrain from making any payment to Niko until the case lodged by the government was resolved.
A senior Petrobangla official said the government's continuation of gas purchase from Feni field without any GPSA might further strain its relationship with Niko.
The company currently operates the Feni field under the terms of a joint venture agreement (JVA) with state-run Bangladesh Petroleum Exploration and Production Company (BAPEX) in 2003 retaining 80 per cent share.
The company attained authority over three Bangladesh gas fields - Feni, Chhatak and Kamta - following the JVA as the fields were shown 'abandoned.'
Niko succeeded in striking the JVA deal without any competitive bidding.
The country's top politicians and bureaucrats came under fire following lawsuits filed against them by the Anti Corruption Commission (ACC) over the legitimacy of signing of the JVA during the caretaker regime.
Niko's outstanding bill for Feni gas is around US$ $40 million, sources said.
The company received payment of $4 million against gas bills before the court order barred further payments.
The government faces the risk of a fresh round of row with Niko as it is taking gas from the Canadian company operated Feni field for the last three months without any agreement, sources said.
The state-owned Petrobangla did not sign a fresh gas purchase and sales agreement (GPSA) with the Niko Resources after expiry of the previous accord on Feni gas in November 2009, a senior Petrobangla official said.
It had, however, asked Niko to continue production from the Feni gas field when the Canadian company intended to stop gas extraction, the official added.
"Signing of a fresh GPSA depends on the decision of government high-ups" said Petrobangla director of Production Sharing Contract Imad Uddin.
Meanwhile, Niko is not getting any payment for Feni gas due to an injunction issued by a local court that barred the government from making payment to the Canadian company following two blowouts in a gas field operated by Niko.
The company, however, planned to drag Petrobangla to the International Court of Justice to settle the long-standing dispute over payments against sales from the Feni gas field.
Niko backtracked following Petrobangla's assurance that it would try for an out-of-court settlement.
The company is now supplying a meager 2.0 million cubic feet per day (mmcfd) of gas to the national grid, when the country's total gas output is around 1980 mmcfd.
The Canadian oil and gas exploration company was initially supplying 35 mmcfd of gas from the Feni field, located some 150-kilometre off the capital.
The company initiated supplying gas from Feni field without signing any GPSA with the government in November 2004.
Niko signed the GPSA in December 2006 two years after starting production following wrangling with the government over gas pricing.
Initially, the Niko Resources was demanding US$ 2.35 per unit (1,000 cubic feet per day or 1 Mcf) but finally agreed to supply gas at $ 1.75 for per unit from the Feni field.
But two consecutive gas field blowouts at Chhatak in the northern region, locally known as Tengratila, in January and June 2005 strained its relationship with the government.
The government took the company to a local court demanding Tk 7.46 billion ($110 million) as compensation for damages from the gas field blowouts.
The case is still pending with the court.
A local law firm also brought public interest litigation against Niko and subsequently got an injunction order that barred the government from paying gas bills to the company until the compensation issue was settled.
Niko last year filed a petition with the High Court seeking payment of its gas bills.
But the court upheld the lower court verdict and directed the government to refrain from making any payment to Niko until the case lodged by the government was resolved.
A senior Petrobangla official said the government's continuation of gas purchase from Feni field without any GPSA might further strain its relationship with Niko.
The company currently operates the Feni field under the terms of a joint venture agreement (JVA) with state-run Bangladesh Petroleum Exploration and Production Company (BAPEX) in 2003 retaining 80 per cent share.
The company attained authority over three Bangladesh gas fields - Feni, Chhatak and Kamta - following the JVA as the fields were shown 'abandoned.'
Niko succeeded in striking the JVA deal without any competitive bidding.
The country's top politicians and bureaucrats came under fire following lawsuits filed against them by the Anti Corruption Commission (ACC) over the legitimacy of signing of the JVA during the caretaker regime.
Niko's outstanding bill for Feni gas is around US$ $40 million, sources said.
The company received payment of $4 million against gas bills before the court order barred further payments.