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The Energy and Mineral Resources Division (EMRD) sits today with top officials of Petrobangla and BAPEX to resolve the disputes with Niko Resources.
A number of issues like gas pricing, gas purchase and sales agreement (GPSA), arrear gas bills and joint venture agreement (JVA) between the Niko Resources and Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) will be discussed during the meeting to solve the crisis.
"During the meeting I along with top government officials will try to find out ways to resolve the Niko issue," EMRD Adviser Mahmudur Rahman told the FE.
In a preemptive drive ahead of the Sunday's meeting
Niko Resources has increased supply of gas to 20 million cubic feet per day (mmcfd) from only two mmcfd to the national grid from Saturday, said sources.
Sources said the dispute between the government and Niko surfaced when Niko without taking consent of its joint venture partner -- BAPEX -- unilaterally stopped supplying gas on February 27 last citing the reason of non-fixation of gas price and non-payment of arrear bills by the government.
Niko, however, was forced to resume supply of gas to the national grid on March 8 following a government's 24-hour ultimatum on March 7 and a warning on February 28.
The government had also threatened to transfer the operational responsibility of Feni gas field to the BAPEX from the Niko if the latter failed to comply with the government ultimatum.
After the cessation of gas supply from the Feni field the Prime Minister's Office (PMO) approved a long-pending Niko proposal to drill the third well at Tengratila.
The ultimatum to Niko and the subsequent development were unique in the energy sector of Bangladesh.
Talking on the dispute EMRD Adviser said: "The problem is that there is no clear indication of gas price in the JVA signed between Niko and BAPEX."
He said as the gas pricing issue was not resolved the GPSA could not be signed.
EMRD sources said Niko is now trying to fix a price at US1.75 for per unit (1,000 cubic feet) of gas for an interim period.
The Canadian company intends to fix the final gas price through an arbitration in international court, they added.
"But we cannot fix gas price for interim period," EMRD adviser said categorically.
Niko has started supplying gas to the national grid from Feni gas field since November 2004 without signing the GPSA as both the parties failed to reach an agreement on the gas price.
As a result, the issue relating to fixation of gas price has remained unresolved over the period, they noted.
Initially, the Niko asked $2.35 for per unit of gas from the government.
But an official committee agreed to pay $1.75 per unit on the ground that Niko was given a developed-but- abandoned field at Feni.
Latter, the Niko lowered its asking rate to $ 2.10 per unit, EMRD sources said.
As per the recommended rate of the official committee, the government will require to pay US$ 14 million against its purchase of gas from Niko. But the amount may come close to $18 million as per the company's asking rate, sources said.
The government paid $ 4.0 million to the Niko in April 2005, EMRD official said.
The company was earlier held responsible by the government for two consecutive gas field blow-outs -- one in January 2005 and another in June 2005 -- at Tengratila.
The government claimed compensation for burning out of 8.0 billion cubic feet (bcf) of natural gas from the Tengratila field and causing damage to the environment equivalent to Tk 840 million) by the two blow-outs last year.
The government sought compensation for the gas field blow-outs after constituting several probe committees.
Niko also agreed to provide a portion of the compensation claim that was raised by the government in January this year.
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