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A global dispute settlement body has made Canadian oil firm Niko liable for two consecutive gas field blowouts at Tengratila in northeastern Chhatak gas field in 2005.
The ruling by the International Centre for Settlement of Investment Disputes, or ICSID, means that the Niko will have to pay compensation to the state-run Petrobangla for its sloppy or inefficient drilling of the Chhatak gas field, a senior corporation official said on Saturday.
He said the centre has yet to assess the amount of damages the Niko will have to pay to Petrobangla.
But the World Bank's arm will quantify it after proper scrutiny soon, he added.
Petrobangla, in its compensation claim to the centre against Niko Resources Ltd in 2016, had sought around US$ 1.0 billion, or Tk 85 billion, for the gas field blowouts.
In 2008, the government had lodged a money suit with the court of Dhaka joint district judge against the Niko and claimed Tk 7.46 billion, or $106 million as compensation against the blowouts.
"The compensation sought in 2008 was much less than the 2016 claim as the previous claim was not complete and well-thought," said a senior official of the Ministry of Power, Energy and Mineral Resources told the FE.
In a separate suit to the ICSID in 2010, the Niko demanded $27.317m from Petrobangla as payment of gas sales from the Feni field.
The ICSID verdict went in favour of the Niko as it directed Petrobangla to pay the dues against the gas sales.
The Canadian firm stopped gas production from the Feni field in May 2010 after continuing supply until 2006.
Petrobangla had stopped paying the Niko for Feni gas since June 2009 after a High Court, or HC, order that put an injunction on making any payment to the Canadian company before it paid compensation for the Chhatak gas field blowouts.
The HC gave the verdict in response to a writ filed by Bangladesh Environmental Lawyers Association, or BELA, a campaign group.
Responding to another writ petition filed by Prof M Shamsul Alam, energy adviser of the Consumers' Association of Bangladesh, or CAB, the Appellate Division of the Supreme Court in 2016 ordered the confiscation of Niko's assets in Bangladesh.
The top court also vacated the joint venture agreement with the Niko, Mr Alam said on Saturday.
"It is unfortunate that the government has yet to take the benefit of the Supreme Court verdict and take over the Niko's assets," the CAB leader said.
The Niko initiated Bangladesh operations in the Feni gas field under an unsolicited JV agreement with the state-run Bangladesh Petroleum Exploration and Production Company, or Bapex, in 2003.
The Canadian firm was awarded the job bypassing tender. In the JV, Niko had 80 per cent stake, while Bapex had 20 per cent stake.
Officials said the Niko focused its attention on Bangladesh in 1997 and took part in the second round gas block bidding, but failed to bag any contract.
In 1998, the Canadian firm had submitted unsolicited proposal to develop the Chhatak and Feni gas fields and could arrange signing a deal after five years.
Separately, the Niko has 60 per cent stake in currently producing Bangora gas field under block 9, Singapore's KrisEnergy has 30 per cent share and Bapex holds the remaining 10 per cent.