The government issued Tuesday a 24-hour ultimatum to the Niko Resources to resume supply of natural gas to the national grid from Feni gas field.
"If Niko fails to comply with the government order by Wednesday evening, the operational responsibility of Feni gas field will be handed over to the Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX)," Energy and Mineral Resources Division (EMRD) Advisor Mahmudur Rahman told the newsmen.
Currently, the Canadian oil and gas exploration and production company -- Niko Resources -- is operating the Feni gas field.
The Niko stopped supplying gas from its Feni field February 27 last on grounds of non-fixation of gas price and non-payment of arrear bills by the government.
The EMRD Advisor issued the ultimatum to Niko's Country Manager Brian J Adolph when the latter called on Rahman at his office at the Secretariat in the city Tuesday.
Talking to the newsmen, Rahman expressed the hope that Niko would be able to appreciate the implications of the government's ultimatum and resume supply of gas to the national grid.
The government's ultimatum came following the Niko's failure to heed to the former's warning issued last week to resume gas supply.
The Niko formally declined to resume gas supply until settlement of the gas pricing issue.
Earlier, the Prime Minister's Office (PMO) Monday approved a Niko proposal to drill the third well at Tengratila.
Sources said Niko has been seeking permission to drill this well in Tengratila for long.
Sources in the EMRD under the Ministry of Power, Energy and Mineral Resources (MPEMR) said the PMO approved the Niko proposal in a bid to put an end to the deadlock between the government and the Canadian company.
The Country Manager of Niko, however, told the newsmen Tuesday that he did not get any formal letter relating to the government's approval for drilling the third well in Tengratila.
Brian also sought firm commitment by the government to pay off the arrear bills against the amount of gas supplied from Feni gas field since November 2004.
A high-level meeting of the joint management committee (JMC) comprising top officials of joint venture partners -- the Niko Resources and the BAPEX - was being held at latter's office at the time of filing this report Tuesday night.
The JMC met there to resolve the issue, though the outcome of the meeting could not be known until 8:00 pm Tuesday.
MPEMR sources said the Niko started supplying gas to the national grid from 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 unsettled over the period, they noted.
Initially, the Niko asked $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, and agreed to pay $1.75 per unit on the ground that Niko was given a ready field at Feni.
Latter, the Niko lowered its previous rate to $ 2.10 per unit, according to sources.
But the GPSA is not yet to be signed as both the parties have so far failed to reach any consensus.
As per the recommended rate by the JMC committee, the government will require to pay US$ 14 million against its purchase of gas from Niko while the amount may come around to $18 million as per the company's rate, sources said.
The government paid only $ 4.0 million to the Niko, an official said.
This is, however, the first-ever incident in Bangladesh for an international oil company to suspend gas production over a dispute relating to gas pricing with the government.
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 -- mostly known as Chhatak -- in Bangladesh,
The government sought compensation for the gas field blow-outs after constituting several probe committees. Niko also agreed to provide a part of the compensation claim that was raised by the government.
UNB adds: The Petrobangla, the state-owned hydrocarbon corporation, viewed the Niko's action as a breach of terms of JVA (joint venture agreement) and warned that any breach of terms might constrain it to take any serious step under the law of the land.
When the government has taken such a strong stance against the Canadian company, the Niko has been allowed to start exploration activities at Tengratila field -- hit twice by blowouts -- leaving the compensation issue unsettled.