Bangladesh has won a compensation case against the Canadian giant oil and gas exploration company - Niko Resources Limited -- held liable for two consecutive gas field blowouts at Tengratila in northeastern Chhatak gas field in Sylhet on January 7, 2005.
The case was lodged at the International Centre for Settlement of Investment Disputes (ICSID) against the Canadian company. The amount of the compensation, however, is yet to be decided.
"After over a decade of complex and prolonged litigation, the ICSID made the rule on February 28," State Minister for Power, Energy and Mineral Resources Nasrul Hamid disclosed the verdict of the Washington-based arbitration court through an online videoconference from his home on Sunday.
“We’ve won the case at the ICSID. Our claim was established in the international court that Niko was responsible for the mega explosions,” he told reporters.
"The ICSID has held that Niko breached its contractual obligations under a joint venture agreement and caused the blowout. The tribunal has ruled that Niko must now pay compensation to Bangladesh for the loss and damage caused by the blowout, including gas loss and environmental damage," he said.
Nasrul Hamid on Sunday said the International Centre for Settlement of Investment Disputes (ICSID) has announced that Niko would have to pay $1billion as compensation to Bangladesh.
He also mentioned that Bangladesh submitted a claim for a total loss of over US$ 1 billion as part of the government’s loss and also of Bapex, a Petrobangla subsidiary.
Anisur Rahman, senior secretary of the Energy Division, who took part in the videoconference, said that it will not be possible to realize the amount from the Niko Resources as the company has already been declared bankrupt.
“But Bangladesh’s benefit in the win of the case is that the country would not need to pay Niko $30 million against the purchase of its share of gas,” he said adding that Bangladesh also seized Niko’s resources at gas block 9 which the company would not be able to sell out following this verdict.
“Niko was trying to sell out the block 9 to a third party but Bangladesh government seized the resources,” he said.
Local lawyer, Barrister Moin Gani, who fought the case in favour of Bangladesh government and Petrobangla, said, “It will take about a year to fully settle the case as the ICSID tribunal has established through it the initial verdict that Niko was responsible for the blowout as it failed to maintain international standard in its drilling works.”
“Now, at the second stage of the case, the international court will ascertain the amount of the loss as we submitted our claim of financial loss,” he said.
Bangladesh claimed a loss over $1 billion of which the government’s loss is $896 while Bapex’s loss is $118 million in the blowout of the gas field.
Barrister Moin noted that Bangladesh will submit additional loss-claim for the damage to environment and the health of people living in the gas filed areas.
He said an expert team has been working to ascertain the losses to the environment of the area and the health of people.
Niko initiated Bangladesh operations in the Chhatak gas field under an unsolicited joint venture agreement with the state-run Bangladesh Petroleum Exploration and Production Company (Bapex) in 2003. However, the first blowout occurred soon after drilling began in the field in 2005.
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.
Meanwhile, in a separate suit with the ICSID in 2010, Niko demanded $27.317 million from Petrobangla in payment of gas sales from the Feni field. The verdict went in favour of Niko and Petrobangla was directed to pay the gas sale dues.
Niko stopped gas production in the Feni field in May 2010 after continued supply since 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.