The GPSA outlines a price of 1.75 dollar per thousand cubic feet (mcf), as was prescribed by Petrobangla and which Niko had been refusing to accept from November 2004. However, Niko had accepted this price back in April and then delaying signing of the GPSA due to various reasons.

One of the reasons include the government's claim of 8.9 billion cubic feet (BCF) gas and a Tk 250 crore bank guarantee from Niko as part of a three-stage compensation for the Tengratila gas field blowout. While Niko is unwilling to pay this compensation, the adviser for the energy ministry had been saying that loss of 8.9 bcf gas from the Tengratila field will be compensated from the Feni field.

It was expected that the compensation issue will be tagged with the GPSA in some way. But now it appears that the GPSA stands alone.

Niko in a study of the Tengratila gas field claimed that this field has only 110 billion cubic feet (bcf) gas. However, a 1996-97 study of Petrobangla had identified a resource base of 1.9 trillion cubic feet (tcf) there, of which 1.1 tcf can be commercially produced.

The compensation claims were made as per the findings of several probe committees on the two Tengratila blowouts. The probe committees entirely faulted Niko's poor planning and operation for the two rounds of blowoutsone in January and another in June 2005.

The compensation claim was sent to Niko back in December and strangely, issued by the Petrobanglawhich is not a party to Niko's deal in this regard. Niko has recently come to the conclusion that the claim should have had come from the government, represented by the energy ministry and the Petrobangla claim has no legal basis.

As Niko lost much of its backstage political support with the ouster of state minister for energy AKM Mosharraf Hossain, it has recently changed its Bangladeshi operation policy, trimmed manpower and struck a partnership with a local businessman who also runs a news organisation.

Now, the Canadian company has finally agreed to sign the GPSA it initialled in April.

Operating through a controversial joint venture agreement (JVA) with Bapex from 2004, Niko has been refusing Petrobangla's price offer of 1.75 dollar mcf for gas from the Feni marginal gas field. Seeking a price of 2.35 dollar, Niko in late February unilaterally suspended gas production from the Feni field as a blackmail strategy.

However after getting threatened of legal action, Niko resumed gas production from early March and then in April agreed to the Petrobangla's price offer of 1.75 dollar mcf. But soon after initialling the GPSA with Petrobangla, Niko became silent and refrained from penning the final deal.

Last week Niko finally wrote the Petrobangla that the company is ready to sign the GPSA and end the impasse over Feni field.

Industry insiders said that after state minister for energy AKM Mosharraf Hossain was ousted from the cabinet for receiving a Tk 1 crore car from Niko, the Canadian company had been restructuring its operation in Bangladesh. Niko changed its anti-media policy and in recent times it has established media relations with the help of a Bangla newspaper editor.

Sources said that since the Canadian company succeeded in striking the JVA without any competitive tender and in violation of various rules, Niko had been flouting rules and regulation in each of its steps. The company evidently gave sidekicks to the ousted state minister for energy AKM Mosharraf Hossain while it had blessings from the alternative powerhouse of the government.

Their undue influence helped Niko start supplying Feni gas field's gas to the national grid from November 2004 without fixing a price or any GPSA. At that time Petrobangla had offered it 1.75 dollars while Niko was hell-bent on 2.35 dollars. Bapex is the owner of the Feni gas field.

Mosharraf was putting pressure on Petrobangla to agree on a price of 2.15 dollars for the Feni gas. He also forced Petrobangla to illegally pay 4 million dollars to Niko's bank account in April, nearly four months after the first Tengratila blowout.

After the second blowout in Tengratila, Niko was silent on the gas price issue for a while. No sooner did it manage the primary task of drilling a remedial well to seal the blownout gas well than it started demanding payment for Feni gas field again and threatening to stop Feni field production otherwise.

The Feni field was used in the past and then abandoned till Niko undertook a re-drilling programme there. It has been producing gas between 20 million cubic feet per day (mmcfd) to 30 mmcfd while the country consumes over 1450 mmcfd.

Niko Country Manager Brian Adolph in an interview with The Daily Star in April had said that the company was worried over the payment as half of the total gas of this field was already supplied to the government without any payment. He claimed that Feni field had a reserve of 25 bcf while it had already given around 13 bcf. Brian added that the company did not agree to the price offer of 1.75 dollar per mcfbut now agreeing to this price as there was no alternative.

Niko was disqualified by the government in the Second Round Block Bidding for oil and gas exploration under PSCs in 1997. But it kept on trying to enter the Bangladeshi gas sector through the backdoor and finally got access to the sector through a hush-hush joint venture deal with Bapex and also through purchasing shares of an American oil company in Block 9.