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BD’s claim over Tengratila gas blowouts overstated

The International Centre for Settlement of Investment Disputes (ICSID) has concluded its virtual hearing on Bangladesh’s compensation claim over two gas blowouts in Tengratila field with an observation that “the evidence (provided by the party, Petrobangla, Bangladesh) does not establish that a serious damage has been occurred there due to these blowouts.”

“The Tribunal heard from the parties (Petrobangla and NIKO) between November 8 to 13 and the verdict is set to be announced by February 2022,” a senior official of Petrobangla told the Daily Observer on Saturday.

The ICSID has conducted the virtual hearing to indentify ‘Head of Loss’ of Tengratila gas blowouts against Canadian company Niko Resources for burning Bangladesh’s gas reserves due to negligence.

Earlier, in a separate verdict, the Tribunal said, “The JVA between BAPEX and Niko Resources Bangladesh was not procured by corruption and remains valid and binding, no administrative irregularity identified.”

“Over Bangladesh’s compensation claim, the Tribunal said, “The decisions concerning the requests relating to the liability for the blowouts and to the resulting damages are reserved.”

“We are waiting for the verdict,” the official said.

However, the respondents’ objections to the Tribunals’ jurisdiction are rejected, it also said that the GPSA (gas purchase and sales agreement) between Petrobangla and Niko Resources Bangladesh was not procured by corruption; there is no basis for revising the Tribunal’s decisions on the NIKO’s payment claim.

Bangladesh claimed over US$1.05 billion as compensation from the Canadian company Niko Resources for burning the country’s gas reserves in Chatak Gas Field in Sunamganj on January 5 and June 24 in 2005 due to negligence.
Niko Resources also owes US$ 25 million as gas bills from Feni gas field. NIKO argued that Bangladesh’s compensation claim is overstated.

The Bangladesh High Court in November 2009 directed the government (Petrobangla) not to pay Niko bills for the gas that Petrobangla had been purchasing from the Feni field since 2004, until the government’s case was disposed of, or until Niko and the government reached a settlement on the compensation issue.

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.
Following the blowout the Energy Ministry and Petrobangla had formed three committees to assess the value of the damage in the blowout. Unfortunately, the reports were uneven and dissimilar.

“We placed all of our arguments and submitted papers supporting the claim before the ICSID. A seven-member panel from Bangladesh took part in the ‘Head of Loss’ discussion virtually that was administrated from Washington DC,” a senior official of Petrobangla told that.

The Court said the identification of other losses and damages that Niko must compensate, and the quantum of such compensation, is to be determined at the next phase of the pending arbitration case, according to Petrobangla.

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.

After a lot of dilly-dallying, the inquiry committee finally published its report, where it was recognized that nearly 250 billion cft of gas was destroyed along with environmental and other damage.

It may be mentioned that Occidental left Bangladesh two years after the Magurchhara 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”.