Canadian firm Niko ruled liable for Chhatak gas field blowout

The International Centre for Settlement of Investment Disputes (ICSID) has made the Canadian company Niko Resources Limited liable for the blowout at Chhatak gas field in Sylhet in 2005. 

"After over a decade of complex and prolonged litigation, on February 28, the ICSID made the rule," State Minister for Power, Energy and Mineral Resources Nasrul Hamid disclosed the update in a virtual press briefing on Sunday. 

"The ICSID has held that Niko breached its contractual obligations under a joint venture agreement and caused the blowout. The tribunal has ruled that Niko must now pay compensation to Bangladesh for the loss and damage caused by the blowout, including gas loss and environmental damage," he said. 

"However, it is not the final rule against Niko as the amount of damages is yet to be assessed," Nasrul added. 

Foley Hoag LLP, the law firm that advocated for Bangladesh's maritime boundary dispute settlement case with India and Myanmar, is advocating the Niko case too.

"It would take a year and a half more to get the final order where the amount of damages will be known that Niko will have to pay to Petrobangla," said Barrister Moin Ghani, a lawyer of the case. 

Niko initiated Bangladesh operations in the Chhatak gas field under an unsolicited joint venture agreement with the state-run Bangladesh Petroleum Exploration and Production Company (Bapex) in 2003. 

However, the first blowout occurred soon after drilling began in the field in 2005. 

In 2008, the government lodged a money suit with the court of Dhaka joint district judge against Niko and claimed $106 million in compensation for the blowouts. The amount was later revised and $1 billion was claimed in 2016. 

Meanwhile, in a separate suit with the ICSID in 2010, Niko demanded $27.317 million from Petrobangla in payment of gas sales from the Feni field. The verdict went in favour of Niko and Petrobangla was directed to pay the gas sale dues.

Niko stopped gas production in the Feni field in May 2010 after continued supply since 2006.

Petrobangla stopped paying Niko for gas from Feni field in June 2009 after a High Court order that put an injunction on making any payment to the Canadian company before it paid compensation for the Chhatak gas field blowouts.