Bangladesh wins $42m int'l arbitration award against Niko over Tengratila blowout

An international arbitration tribunal has ordered Canadian energy company Niko Resources to pay $42 million in compensation to Bangladesh over the Chhatak gas field blowouts that occurred in 2005.

The verdict of the International Centre for Settlement of Investment Disputes (ICSID) reached the government through official channels a few days ago, Petrobangla Chairman Rezanur Rahman told The Business Standard.

"This is a state-level issue," Rezanur said. "Once we receive the complete verdict, it will be sent to the Attorney General's Office for legal opinion, and the next course of action will be decided accordingly."

Although Bangladesh had sought nearly $1 billion in damages, the tribunal awarded a significantly lower amount. Petrobangla is yet to receive the full copy of the verdict but has obtained a summary of the ruling, officials said. The matter was discussed at a Bapex board meeting on Tuesday.

In 2003, Niko Resources (Bangladesh) Ltd – a subsidiary of Canada-based Niko Resources – signed a joint venture agreement with Bapex to develop gas fields in Feni and Chhatak. Under a separate agreement, Petrobangla committed to purchasing gas extracted from the Feni gas field.

However, operations at Tengratila gas field in Chhatak went disastrously wrong when a drilling well blew out in January 2005, followed by a second explosion in June the same year. The incidents caused extensive damage to the gas field, loss of human lives, and severe environmental degradation.

A government investigation later found serious faults in Niko's drilling practices, prompting Petrobangla to file a lawsuit against the company in a Bangladeshi court, seeking compensation for the losses.

Bangladesh claimed damages of $118 million for Bapex and an additional $896 million for the government, citing destruction of natural resources, environmental harm, and economic losses resulting from the blowouts.