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The government has warned the Niko Resources (Bangladesh) Ltd with tough legal measures unless the company immediately resumes gas production and supply from its Feni field to the national grid.
The state-owned Petrobangla issued the caution Tuesday after the Canadian oil company - Niko - has suddenly stopped supplying gas from its Feni filed since last Monday on the ground of non-fixation of gas price by the government.
"Your unilateral decision to suspend the production of gas from the Feni Gas Field is not intelligible to us," the Petrobangla wrote to the Niko Country Manager Brian J Adolph.
The letter further said: "We request you to immediately restore gas production to an increased quantity from the field and deliver the same pending negotiation of GPSA (gas purchase and supply agreement) to avoid breach of the terms of JVA (joint venture agreement) on your part, which might constrain us to take any serious steps under the law of Bangladesh,"
The Petrobangla, however, mentioned that the Niko should have discussed the matter with the joint management committee (JMC) before going for the shutdown.
"In case you (Niko) have planned to shut down due to problems in production operations, as per the provision of JVC you are supposed to discuss the matter at the JMC," the letter further said.
The Petrobangla is actively scrutinising the draft GPSA submitted by the Niko, the letter said, noting that the authority would respond to the same in due course of time.
"If the shutdown has any connection with finalisation of the GPSA, it appears to be unnecessary at this point of time when negotiation has not even started," it said.
The Petrobangla said that in a previous letter it requested the Niko to increase gas production from the said field and postpone the testing activity until the authority issued a clearance.
The matter was also discussed at a meeting that was held on February 24 last between the two sides, it added.
According to official sources, although the Niko has started production and supply of gas since November 2004, the government has so far failed to sign a GPSA with it.
As a result, the fixation of gas price remained unsettled over the period, they noted.
Initially, the Niko asked US$ 2.35 for per unit (1,000 cubic feet) of gas from the government.
But the government formed a committee to fix the gas price from the Niko's Feni field, officials said, adding that it recommended the rate to be $ 1.75 per unit.
Latter, the Niko revised its previous rate to $ 2.10 per unit, according to sources.
Officials, however, said as per the recommended rate by the committee, the government required to pay $ 14 million against its purchase of gas from Niko while the amount could be $ 18 million going by the company's asking rate.
The government, on the other hand, so far paid only $ 4.0 million to the Niko, a government official informed the FE.
A section of officials, however, observed that the suspension of gas by the Niko would not create any significant affect on the government's overall supply chain.
Niko was supplying only 2.0 million cubic feet of gas per day (MCFD) over the last couple of weeks to the national grid against the previous quantity of 18 MCFD.
Much earlier, the Niko's gas supply from the Feni filed was varying between 28 and 29 MCFD, according to an official.
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