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Dhaka Tribune

Tengratila gas blowout: ICSID decision comes in favour of Petrobangla’s claim

Update : 20 Aug 2013, 05:28 PM

The International Arbitrary Tribunal Tuesday in its decision on Niko’s lawsuit against the Petrobangla’s compensation case paved the way for Bangladesh’s claim to release $106m from Niko Resources Ltd for its two devastating blowouts at Chhatak gas field in 2005.

In another lawsuit filed by Niko with the International Centre for Settlement of Investment Disputes (ICSID)against Petrobangla that stopped paying gas price to Niko since 2006, the tribunal maintained that it had jurisdiction to decide the claimants’ claim.

The ICSID decided that it would give by separate order directions for the continuation of the proceedings.

The tribunal heard the two lawsuits on October 13-14 of 2011 in London, and Tuesday it came up with the ruling.

The International Centre for Settlement of Investment Disputes (ICSID) cleared Bangladesh as a respondent from the lawsuit filed by Niko, claiming that a Bangladesh court did not have the jurisdiction to directit to pay the compensation.

Petrobangla Chairman Prof Hossain Monsurtold the journalists during a press conference at Petro Centre in the city's Karwanbazar yesterday.

In its order, the ICSID maintainedthat it had no jurisdiction over Bangladesh and Petrobangla, thus sustaining a pending money suit filed by Petrobangla against the Canada-based oil and gas exploration company with the court of Dhaka joint district judge.

However, the arbitrary tribunal did not make any observation about Bapex – the third respondent of the lawsuit filed by Niko with ICSID – in its Tuesday's order.

In 2010, Niko had filed two lawsuits with the ICSID against Petrobangla sincethe latter stopped paying the price of its shared gas from Fenigas field since 2006.

The three-member tribunal had been constituted back in 2010 with ICSID-nominated Michael E Schineider from Germany as its president.

The other arbitrators include New Zealand's Campbell McLachlan who represented Bangladesh, Petrobangla and Bapex, and Jan Paulsson representing Niko.

The tribunal assumed jurisdiction over a joint-venture agreement (JVA) on gas purchase and saleinkedbetween Petrobangla andNiko andBapex on December 27, 2006.

In a separate suit, Niko demanded $27.317m from Petrobanglaas payment of gas sales.

Petrobangla refrained from making the payment following a High Court order that put an injunction on making any payment to the Canadian company before it paid thecompensation of $106m.

The HC gave the verdict on June 17, 2009 in response to a writ filed by Bangladesh Environmental Lawyers Association (BELA).

BELA brought public interest litigation against Niko and subsequently got an injunction order that barred Petrobangla from paying gas bills to the company till the compensation issue was settled.

Bangladesh lodged a money suit with the court of Dhaka joint district judge against Niko Resources Ltd in 2008 Juneunder joint venture agreement (JVA) and claimed Tk7465m ($106m) as compensation over blowout incidents at Chatak gas field in 2005.

The lawsuit is awaiting trial.

Niko filed separate cases against Petrobangla seeking payment on producing gas in the Feni gas field.

An expert committee formed by the energy ministry held Niko responsible for two successive blowouts in Chhatak gas field, locally known as Tengratila field, in early 2005.

The committee assessed the said amount as compensation for damageto oil and gas resources in the field.

The Canadian firm stopped gas production from Feni field in May 2010.

It went into operation in the Fenigas field under a 2003-joint venture agreement with the state-run Bangladesh Petroleum Exploration and Production Company (Bapex) which gave it an 80% stake while the remaining 20% belonged to Bapex.

Niko on June 24 agreed to pay nearly $9.5m in fines after admitting to a Canadian court that it had bribed AKM Mosharraf Hossain, former state minister for energy ministry of the BNP-led four-party alliance government.

Following the verdict of the Canadian court, the Bangladesh Anti-Corruption Commission filed another bribery case against Mosharraf Hossain with Shahbagh police station.

In 2012 August, the ACC submitted the bribery charge-sheet saying the then minister had accepted bribe from Niko in exchange of awarding an oil and gas exploration contract to the company.

The case is now pending with a Dhaka Metropolitan Court.

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