Bangladesh Petroleum Exploration and Production Company (Bapex) is sitting idle even after the verdict in the Chhatak gas field case. Bapex Managing Director Md. Shoaib has said that work on the gas field will start after receiving the price award.
He told Barta24.com that working until the price award is received may create legal complications. Our lawyer has advised that, so no work can be done there for now.
Bapex sources said that they have confirmed that they will receive the award-related order from the International Court of Arbitration for Settlement of Investment Disputes (ICESID) in London within the first half of this January.
Petrobangla Director (Planning) Abdul Mannan Patwary also spoke in the tone of Bapex MD. He also told Barta24.com that it would not be right to do any work on it until the final verdict is received.
The Chhatak gas field was discovered in 1959. The following year, the first well was drilled in the gas field and nine gas layers were discovered between 1,090 meters and 1,775 meters. Gas was extracted from there and supplied to the Chhatak Cement and Paper Mill. 26.46 billion cubic feet of gas was extracted, but at one point, the well was closed when water started coming in.
After being closed for a while, on February 27, 2003, an agreement was signed with the Canadian company Niko to develop the gas field. Two serious explosions occurred on January 7 and June 24, 2005, during the drilling of an exploration well in the gas field. This caused extensive damage and loss due to the burning of a layer of gas.
Petrobangla filed a case against Niko in the explosion. The High Court ordered the confiscation of all Niko's assets in Bangladesh and the cancellation of the executed contract. Then Niko went to the Supreme Court, where the verdict was also in favor of Bangladesh.
Niko went to the International Court of Arbitration (ICSID) in the Supreme Court. They filed an arbitration case seeking a declaration that they were not responsible for the gas field explosion. On the other hand, in 2016, Bapex conducted a study through a committee of international experts. In this, Bapex sued Niko for 118 million dollars and the Bangladesh government for 896 million dollars in compensation. The Niko Tribunal issued a historic verdict on February 28, 2020, accusing Niko of violating the terms of the joint venture agreement for the explosion.
The tribunal ordered Bapex to compensate Niko for all damages directly arising from the incident, accusing Niko of the incident. At the same time, the tribunal ordered Bapex to compensate Niko for the gas released from the Chhatak gas field in the incident. The tribunal was instructed to raise the amount of other damages, including environmental damages, to Exide. An order regarding that damage (price award) could come any day.
Although this potential gas field is fractured, it is divided into Chhatak East and Chhatak West (Tengratila). A large amount of gas in Chhatak West was burned in the fire, other layers and Chhatak East reserves exist. The potential reserves are considered to be 2 to 5 TCF (trillion cubic feet). If gas is found there, it is possible to supply it quickly.
Former Managing Director of Bapex Amjad Hossain told Barta24.com, assuming that there may be legal complications when going to work in the auction field. But where is the obstacle in preparing the DPP (Development Project Proposal). It takes 6 months to 1 year for paperwork; there should be no obstacle in moving that work forward. In fact, no one wants to work responsibly. During this great gas crisis, the gas field should not be left like this. Work should be started on the field quickly.
The reserves of domestic gas fields are running out, which is constantly reducing production. At one time, 2800 million cubic feet of gas was available from domestic gas fields daily, but now it has come down to 1932 million cubic feet. To increase supply, LNG is being imported through two FSRUs.
Petrobangla said that the permitted load in the country for 8 consumer categories is 5,356 million cubic feet (daily). Against this, the demand is 3800 to 4000 million cubic feet. Against the demand, 2800 million cubic feet of gas is being supplied daily, and the deficit remains around 1200 million. An average of 2,493 million cubic feet in the 2023-24 fiscal year.