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Petrobangla seeks Tk 840 m as compensation from Niko

Thursday December 08 2005 09:58:36 AM BDT

Petrobangla on Tuesday formally made its compensation claim to Niko Resources Limited for two blowouts at Chhatak gas field, known as Tengratila, reports BDNews.

Niko has received the claim and sent it to its headquarters in Canada for legal opinion.

Officials concerned said the compensation claim was made in a letter signed by Petrobangla director (PSC) Raihanul Abedin.

According to the letter, Niko will have to supply three billion cubic feet (BCF) of gas free of cost for burning the same amount of gas in Tengratila.

The Canadian company will also have to compensate Petrobangla for another 5.89 BCF of gas burnt at the sub-surface level.

However, it is not clear whether the 5.89 BCF gas will have to be supplied by Niko free of cost or whether there will have to be a compensation payment.

The letter said the actual losses of gas could not be ascertained before production starts at the field. So, the letter asked Niko to make a bank guarantee equivalent to the price of 45 BCF gas.

Some Tk 840 million has been sought as compensation for damage to environment.

Officials said the claim was made after Prime Minister Khaleda Zia, who is in charge of Ministry of Power, Energy and Mineral Resources, approved it.

Earlier, Energy Advisor Mahmudur Rahman approved the compensation claim prepared by Petrobangla, the state-run oil, gas and mineral corporation.

The first accident took place in January while Niko was drilling in the abandoned gas field under a joint venture agreement (JVA) with Bangladesh Petroleum Exploration and Production Company Limited (BAPEX), a subsidiary of the Petrobangla.

The second blowout happened in June when Niko was drilling a relief well for extinguishing the fire originating from the first explosion.

Niko claimed that it successfully put out the fire by drilling another relief well in October. BAPEX, however, said although Niko could successfully control the fire, there are still flames in several points.

Niko, the Canadian energy junior, has so far paid Tk 2.5 crore in compensation to the local people.

Niko executive chairman, Edward S Sampson recently met with Energy Advisor Mahmudur Rahman and sought permission to begin production from the gas field.

In reply, the advisor told him that the Canadian company will not be permitted to start production until it agreed to make the compensation.

Sampson, on the other hand, in a recent interview with BDNEWS said accidents in the oil and gas industry are common. "Every year 300 such accidents take place across the world, but there is no provision of compensation for burnt gas."

He, however, told the Energy Advisor that Niko will follow the JVA if Petrobangla formally makes the compensation claim.


Bangladesh Observer

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