But as promised by former energy ministry adviser Mahmudur Rahman, the GPSA is not addressing any issue related to compensation for the Tengratila gas field blowouts.

"The compensation issue has apparently become so quiet that it seems Bangladesh did not lose anything in the two rounds of blowouts," regretted a Petrobangla official. Two rounds of official investigations blamed Niko's poor operation and negligence for the blowouts in 2005.

The GPSA, initialled by Petrobangla and Niko back in July and cleared by the law ministry recently, fixes Feni gas price at $1.75 per thousand cubic feet (mcf).

As per this price, Petrobangla till this month owes Niko and its local partner Bapex gas price of around $ 22 million.

Previously, Petrobangla was forced to make an illegal payment of $4 million to Niko's account though all payments should be made to a joint account held by Niko and Bapex.

The then state minister for energy AKM Mosharraf Hossain had forced Petrobangla to take Feni gas from November 2004 without fixing any price. The price issue remained unresolved as Niko was seeking a high tariff of $2.35 per mcf, and Petrobangla did not see any justification to pay more than $1.75. The stalemate ended when Niko finally accepted the Petrobangla price in April this year.

Niko officials said with the finalisation of the GPSA, it will now prepare new billing for the gas sales.

Meanwhile Bapex sources said Niko and Bapex have not created a joint bank account. "Before that can be done, the GPSA has to be made effective because Bapex is owned by the government and we have been told by Bangladesh Bank that there has to be a gas sales agreement first to allow us to open a joint bank account," noted one source.

Without this joint account, Niko will not be able to receive arrears from Petrobangla, said a Petrobangla official.

Niko on the other hand have kept on sending monthly gas sales bill to Petrobangla for record.

The Feni field was used in the past and then abandoned till Niko undertook a re-drilling programme there under an unsolicited joint venture agreement (JVA) with Bapex. It has been producing s between 20 million cubic feet per day (mmcfd) and 30 mmcfd gas while the country consumes over 1,450 mmcfd.

Tengratila blowout compensation

The government remains silent on the Tengratila blowout compensation issue. Based on two investigation reports, the government a year ago submitted a 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 blowouts.

The two rounds of blowouts took place in January and June, 2005.

While Niko is unwilling to pay this compensation, the then energy ministry adviser Mahmudur Rahman repeatedly said loss of 8.9 bcf gas from the Tengratila field would be compensated from the Feni field.

A few months back, in a letter to the government Niko sought an international arbitration to decide on the compensation issue. It sought details on how the government came to the conclusion about the losses caused by the blowouts.

Niko argues that the gas loss due to Tengratila blowouts could not be so high as the field itself has a small reserve.

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

To seal off the blown out gas field's well, Niko drilled two wells -- an observation well and a relief well -- with the company's insurer bearing the cost. Petrobangla suspects that Niko drilled the two wells at the cost of the insurer with the plan to convert one of these into a development well at a convenient time, and show the cost of that well as 'recoverable'.

Back in June-July, Niko tried to test the observation well amid reservations by Bapex and faced difficulties. Ever since the company abandoned the well.

Niko succeeded in striking the JVA without any competitive tender and in violation of various rules. The then state minister Mosharraf was ousted in mid-2005 for receiving a Tk 1 crore car from Niko.

The company 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 Bangladesh's gas sector through the backdoor and finally got access to the sector through a hush-hush joint venture deal with Bapex and also through purchase of shares of an American oil company in Block-9.