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.
According 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 anonymity.
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.
After 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".
"Because 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.
"The 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.
Sources in 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 Resources.
Unfortunately, it failed to reach any conclusion, as Niko is contesting its liabilities for the two gas blowouts.
Petrobangla, 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.
The 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 compensation issue.
"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 official said.
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.