Post by
bulltraderr on Nov 24, 2015 5:49am
Int'l court to further hear Bapex compensation claim against
An international court will further hear in February next the compensation case filed by the state-owned Bangladesh Petroleum Exploration and Production Company (Bapex) against Canadian firm Niko Resources over gas-field blowouts, said officials.
"The International Centre for Settlement of Investment Disputes (ICSID) has asked for coming up with submissions on compensation over the two consecutive blowouts in the Niko-operated Tengratila gas field at the next hearing" Petrobangla chairman Istiaque Ahmad told the FE Monday.
Once the ICSID decides on the liability of the blowouts with Niko, it would later arrange further hearing to determine the losses.
The Washington-based court had heard arguments over the compensation claim early this month.
The Petrobangla chairman was one of the members of Bangladeshi delegation that attended the ICSID hearing.
Petrobangla in 2008 lodged a money suit with local court, seeking Tk 7.46 billion ($106 million) as compensation for damages from Niko for Chhatak gas-field blowouts in 2005 when the IOC was in operation. The local court asked Petrobangla not to make payment to Niko for gas until the compensation issue was settled.
The petroleum corporation, however, had lost out to Niko in October this year over payment against gas sales as the ICSID pronounced the verdict for payment of US$31 million in addition to Tk 190 million along with interest to the Canadian firm.
It had sent a certified copy of the verdict to Petrobangla over the payment claim raised by Niko for gas supply from its Feni field.
Sources said the foreign firm had initiated gas supply from Feni gas field in November 2004 and continued until April 2010. It had stopped gas production from Feni field after lodging the arbitration suit with the ICSID.
Niko used to supply around 2.0 million cubic feet per day (mmcfd) of gas from Feni gas field that supplied as much as 35 mmcfd.
Petrobangla initially made payments but later stopped paying in line with the verdict from the local court.
In its verdict over payment, the ICSID stated that Petrobangla should pay approximately US$25 million plus Tk 140 million as per invoices for gas delivered from November 2004 to April 2010.
In addition, it should pay interest until September 11, 2014 of approximately $6 million plus Tk 50 million. The interest rate from September 12, 2014 would be at six-month Libor (London interbank offered rate) plus 2.0 per cent for USD amounts and 5.0 per cent for BDT amounts compounded annually, the ICSID pronounced.
The ICSID asked for making payments into escrow accounts, which should be opened by Niko with a reputed internationally operating bank and the funds in the escrow accounts shall be released only as instructed by the tribunal or by joint instructions of Niko and Petrobangla.
And Petrobangla should ensure that the USD amounts paid into the escrow account are freely available to Niko without any restrictions if and when payment to the firm is ordered by the tribunal.
Niko Resources attained operatorship of the Feni field under the terms of a 2003 joint-venture agreement (JVA) with Bapex, which gave it an 80 per cent stake.
The remaining 20 per cent went to Bapex.
The company also had attained exploration rights over three other onshore gas fields -- Feni, Chhatak and Kamta -- following the JVA as the fields were declared 'abandoned' by Petrobangla.
Niko succeeded in striking the JVA deal without any competitive bidding.
Apart from the JVA, the Canadian firm along with Singapore's KrisEnergy and Bapex is also involved in a production-sharing contract (PSC) for block 9 in Bangladesh, where KrisEnergy is the operator.
Niko entered block 9 after purchasing stakes from Chevron and Texaco.