Govt opts for outside court settlement with Niko
Saturday, 9 January 2010
M Azizur Rahman
The government has planned to settle the long-pending dispute with Niko Resources over payments against the sale of gas produced from Feni field through discussion rather than litigation, officials said Friday.
"We cannot stop Niko from going to the international court. But we are interested in resolving the payment row through discussion," Petrobangla chairman Dr Hossain Monsur told the FE Friday.
He said the Petrobangla would discuss the issue with Niko soon.
The government moved to settle the payment row with Niko through discussion after Niko recently expressed its keenness to settle the issue through international court.
Niko vice president Larry Fisher discussed the issue with the energy secretary Mohammad Mohsin and proposed the government to jointly submit a suit with the Washington-based International Centre for Settlement of Investment Dispute (ICSID) to resolve the issue.
The Canadian oil and gas explorer Niko so far received US$4.0 million as bills for Feni gas, but outstanding bills stood around $40 million.
Feni gas field is around 100 kilometers off the capital having an area of 43 square kilometers in size.
Payments against gas sales to Niko from Feni field was stopped following a local court verdict in September 2005 ordering the government not to pay gas bills to the Canadian company until the compensation issue over two consecutive gas field blowouts was settled.
The blowouts occurred in another Niko operated gas field at Chhatak, locally named Tengratila, when the company was drilling there in January and June 2005.
A probe committee on the Tengratila blasts revealed that around 3.0 BCF gas had been lost from the surface level and another 5.9 BCF from the sub-surface level of the Tengratila gas field due to the blowouts.
The probe committee also found Niko's poor planning and operation were responsible for the two rounds of blowouts.
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 disposal.
Local lawyers and human rights organization 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.
During the row with the government Niko had unilaterally stopped gas supply from its operational Feni gas field in March 2006 but resumed gas supplies following the government's warning of handing over the field to the government company.
Niko last year filed a petition to the High Court seeking payment of its gas bills saying the realized money would be invested for further exploration in Bangladesh .
But the High Court on November 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 gas field since November 2004.
But the company signed the gas sale and purchase agreement for Feni gas in December 2006, two years after starting gas production from Feni field.
Though the initial production from Feni was over 30 million cubic feet per day (mmcfd) its current production is below 2.0 mmcfd.
Niko operates the Feni field under a joint venture agreement (JVA) with the state-run Bangladesh Petroleum Exploration and Production Company (BAPEX) executed in 2003 retaining 80 per cent share and the remaining 20 per cent to BAPEX.
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.
Apart from the three fields that Niko got exploration rights following JVA, it has 60 per cent stake in Tullow-operated Bangura gas field under block-9 in Bangladesh.
Irish Tullow has 30 per cent stake in block-9, while the remaining 10 per cent is owned by BAPEX.
The government has planned to settle the long-pending dispute with Niko Resources over payments against the sale of gas produced from Feni field through discussion rather than litigation, officials said Friday.
"We cannot stop Niko from going to the international court. But we are interested in resolving the payment row through discussion," Petrobangla chairman Dr Hossain Monsur told the FE Friday.
He said the Petrobangla would discuss the issue with Niko soon.
The government moved to settle the payment row with Niko through discussion after Niko recently expressed its keenness to settle the issue through international court.
Niko vice president Larry Fisher discussed the issue with the energy secretary Mohammad Mohsin and proposed the government to jointly submit a suit with the Washington-based International Centre for Settlement of Investment Dispute (ICSID) to resolve the issue.
The Canadian oil and gas explorer Niko so far received US$4.0 million as bills for Feni gas, but outstanding bills stood around $40 million.
Feni gas field is around 100 kilometers off the capital having an area of 43 square kilometers in size.
Payments against gas sales to Niko from Feni field was stopped following a local court verdict in September 2005 ordering the government not to pay gas bills to the Canadian company until the compensation issue over two consecutive gas field blowouts was settled.
The blowouts occurred in another Niko operated gas field at Chhatak, locally named Tengratila, when the company was drilling there in January and June 2005.
A probe committee on the Tengratila blasts revealed that around 3.0 BCF gas had been lost from the surface level and another 5.9 BCF from the sub-surface level of the Tengratila gas field due to the blowouts.
The probe committee also found Niko's poor planning and operation were responsible for the two rounds of blowouts.
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 disposal.
Local lawyers and human rights organization 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.
During the row with the government Niko had unilaterally stopped gas supply from its operational Feni gas field in March 2006 but resumed gas supplies following the government's warning of handing over the field to the government company.
Niko last year filed a petition to the High Court seeking payment of its gas bills saying the realized money would be invested for further exploration in Bangladesh .
But the High Court on November 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 gas field since November 2004.
But the company signed the gas sale and purchase agreement for Feni gas in December 2006, two years after starting gas production from Feni field.
Though the initial production from Feni was over 30 million cubic feet per day (mmcfd) its current production is below 2.0 mmcfd.
Niko operates the Feni field under a joint venture agreement (JVA) with the state-run Bangladesh Petroleum Exploration and Production Company (BAPEX) executed in 2003 retaining 80 per cent share and the remaining 20 per cent to BAPEX.
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.
Apart from the three fields that Niko got exploration rights following JVA, it has 60 per cent stake in Tullow-operated Bangura gas field under block-9 in Bangladesh.
Irish Tullow has 30 per cent stake in block-9, while the remaining 10 per cent is owned by BAPEX.