The Energy Ministry is set to settle the two-gas-blowout compensation issue with Niko Resources through "negotiation" like Magurchhara gas blow out, sources told The Daily Observer on Wednesday.
According to the
Energy Ministry sources, Law Minister, State Minister for Power, Energy
and Mineral Resources, Petrobangla Chairman and a senior official of
Prime Minister's Office sat with the Niko officials in London last week
to settle the issue and find out new ways to settle the dispute.
to the settlement, Bangladesh agreed to take US$30 to $50 million as
compensation against its right to claim $107 million, however, the
Bangladesh policymakers also agreed to allow the Canadian Company to
work as a partner at Tengratila Gas Field (Chattak) through extended its
tenure for next five years (which has been already expired) and
continue to work at Feni Gas Field.
The government has taken up the
decision at a time when two separate cases had been filed in Bangladesh
Court and one arbitration is going on at the International Centre for
Settlement of Investment Disputes (ICSID), however, Bangladesh
policymakers wants to settle the issue in the 'sideline dealings'
through which Bangladesh would abandon its huge claim on its national
property, sources said.
"The date was fixed for the final hearing and
fix the mode of payment for bills from Feni Gas Field.., however, we
settled all the issues, yes, it should be endorsed by the Prime Minister
as she is the line Minister," a senior official said preferring
If the Prime Minister endorses it then Petrobangla-Bapex
will withdraw the compensation case against Niko from the local court,
the official added.
There was a huge blowout on June 14 in 1997 in one of the Occidental gas fields at Magurchhara.
a lot of dilly-dallying, the inquiry committee finally published its
report, where it was recognised that nearly 250 billion cft of gas was
destroyed along with environmental and other damages. Occidental left
Bangladesh two years after the blowout after selling its business to
Unocal Corporation, another US company without settling the compensation
issue, latter the Energy Ministry managed the whole affair making a
non-transparent so-called 5 per cent "supplementary agreement deal".
of irresponsibility and malfunctioning by two multi-national oil and
gas companies namely Occidental Petroleum in Magurchhara in Sylhet
during 1997 and Niko Resources in Tengratila in Sylhet during
2006...around 500 billion cubic feet gas were simply burnt out or
wasted! Around 87.50 acres of land in Magurchhara were damaged with
Tk176.97 crore losses in total. Niko drilled in the gas wells earlier
declared by Petrobangla as unworthy for exploration purpose that caused
the disaster. We owe to these two oil giants around Tk20,000 crore,"
Prof Anu Muhammad told The Daily Observer.
According to the sources
in the Energy Ministry, as per the ICSID decision international blowout
experts will assess liabilities of Niko Resources in the two gas
blowouts in Tengratila Gas Field in 2005, as the Canadian company argued
that Bangladesh's right to claim $107 million from it was overstated,
unfortunately a Bangladesh government report did not support the claim.
"There were two figures in the committee report?it is not a clerical mistake, they have done it deliberately," an official said.
ICSID wanted to know our opinion about the engagement of experts and we
agreed, but with a note that it would not affect the money suit, but
finally it would not be justified," the official claimed.
Petrobangla and the Energy Ministry said that the tribunal held a
meeting with Niko and representatives from Bangladesh on October 16 to
settle the payment of gas bills for sale from the Feni field to Niko
Unfortunately, it failed to reach any conclusion, as Niko is contesting its liabilities for the two gas blowouts.
the state-owned energy company, claimed $107 million for the two
blowouts from Niko Resources in a Bangladesh court in 2013. Niko
Resources also owes $25 million as gas bills from Feni Gas Field.
Bangladesh High Court in November 2009 directed the government not to
pay Niko bills for the gas that Petrobangla had been purchasing from the
Feni Gas Field since 2004, until the government's case was disposed of,
or until Niko and the government reached a settlement on the
"We never said we will not pay the bills (to
Niko). We just want to make sure that the ICSID would do justice to our
claim. By directing Niko to settle the compensation, the Bangladesh
court has directed us to confiscate the money that Niko claimed it had
earned by selling gas from the Feni Gas Field to Petrobangla," the
The official said Niko agreed to pay $30 million as
compensation and another $20 million would be cashed from the gas bill
claimed by Niko Resources.
In April 2010, Niko Resources filed two
separate cases against Bangladesh with the ICSID, contesting its
liabilities in the Tengratila gas explosions. It also filed another
arbitration suit challenging the Bangladesh court's decision to withhold
payment on gas produced from the Feni Gas Field until the claim for
damages to Tengratila was settled.
The ICSID started the hearing on
the payment of gas bills for sale of gas from the Feni Gas Field in
April last year. The payments of these gas bills were withheld following
an order of the Bangladesh High Court.