Bangladesh has won the Tengratila gas field explosion case. The Washington-based international tribunal, International Centre for Settlement of Investment Disputes (ICSID), has ordered Canadian company Niko to pay 42 million US dollars (BDT 516 crore, calculated at BDT 123 per dollar) in compensation for the devastating explosion that occurred in 2005. Engr. Rezanur Rahman, Chairman of Petrobangla, confirmed ICSID’s ruling on Thursday (January 29).
A Petrobangla source stated that in its recent verdict, ICSID ordered Niko to pay $40 million as compensation for approximately 8 billion cubic feet of gas burned in the gas field, and an additional $2 million for environmental and other damages.
The Tengratila gas field in Chhatak, Sunamganj, was discovered in 1959. The following year, nine gas layers were identified between 1,090 meters and 1,975 meters through well drilling. Gas extracted from here was supplied to Chhatak Cement and Paper Mills. After approximately 26.46 billion cubic feet of gas were extracted, water infiltration led to the well’s closure.
After remaining closed for a long time, the gas field was handed over to Niko in 2003 for gas exploration. Following the commencement of drilling, two severe explosions occurred consecutively at the gas field on January 7 and June 24, 2005. The explosions resulted in the burning of the gas reserves in the field and extensive damage to nearby structures and assets. Petrobangla demanded BDT 746 crore in compensation from Niko for this, but the company refused to pay.
Subsequently, in 2007, Petrobangla filed a case in the local lower court, and the payment of gas bills for Niko’s Feni gas field was stopped. The High Court ordered the confiscation of all Niko’s assets in Bangladesh and the cancellation of the executed contract. Later, when the matter went to the Supreme Court, the verdict also favored Bangladesh. However, Niko filed two cases with ICSID in 2010, alleging non-payment of withheld gas bills and compensation.
Among these, in a 2014 ruling, ICSID ordered Petrobangla to pay the dues for the Feni gas field. Again, in 2016, BAPEX filed a case against Niko at ICSID, claiming approximately BDT 9,250 crore (about USD 117 crore) in compensation. The final order in that case has now directed compensation. The international tribunal stated in its verdict that the drilling operations were conducted under Niko’s supervision and management. The explosions occurred due to the failure to adhere to international petroleum industry standards and a lack of necessary precautions, making Niko directly responsible for these incidents.
This gas field is divided into two parts: Chhatak East and Chhatak West (Tengratila). Although one gas layer in the Chhatak West section was burned in the fire, other layers and the gas reserves in the Chhatak East section remain intact. The estimated reserves in this gas field are considered to be 2 to 5 trillion cubic feet.
Regarding this, the Petrobangla Chairman stated that the Development Project Proposal (DPP) for drilling new wells in the Chhatak gas field is ready. “We were awaiting ICSID’s final ruling. Now, after consulting with lawyers, the next steps will be taken swiftly,” he added.
