FHM Humayan Kabir

State-owned Petrobangla has taken a move to release necessary funds to the Canadian oil company, Niko, for augmenting gas production from Feni field by December this year, officials said Friday.

"We've moved the High Court to allow some payment to Niko Resources from its outstanding bills so that it can drill two new wells for producing additional 40 million cubic feet of gas per day (mmcfd)," Petrobangla Chairman Jalal Ahmed told the FE.

Nearly Tk20 million would be required to invest in developing the two wells in the Feni gas field, an estimation of Petrobangla said.

Following severe gas crisis in the industrial hub Chittagong, the state-owned energy corporation asked the Canadian oil company, the Feni gas field operator, to augment production.

Niko Resources suspended their field development works in Feni when the Petrobangla stopped gas bill payment following an order of the High Court (HC) in 2005.

The HC in September 2005 asked the Petrobangla to stop gas bill payment to the Canadian company without opening joint bank account with its (Niko's) another partner state-owned gas exploration and production firm --BAPEX.

Following serial blow-outs in Tengratila in January and June of 2005, three human rights organisations-- the Bangladesh Environment Lawyers' Association (BELA), Ain-O-Shalish Kendra and Odhikar- jointly filed a writ petition against the Canadian company and the HC gave the stay order.

"The HC in a recent hearing has asked us to state the development of its earlier directions. We have informed the court that the joint bank account has been opened," a director of the Petrobangla said requesting anonymity.

He said: "We hope a positive decision from the HC will come within next two months. Then we'll make necessary payment to the Niko for drilling two wells for producing additional 40mmcfd of gas."

Niko Resources Ltd. earlier submitted their Feni field development plan to Petrobangla seeking outstanding arrear bills for drilling two new wells.

The Canadian company is now supplying only 3.4mmcfd of gas from the Feni field at a rate of $1.75 per thousand cubic feet. The remaining total recoverable gas reserve at the field is about 69 billion cubic feet, Petrobangla data showed.

The director said the Canadian company's outstanding arrear bills for their gas sale had stood at nearly US$32 million until November last year.

"We'll pay Niko only the amount required for developing the wells from their total outstanding bills," the director said adding, "We'll not pay full bills to the oil company until resolving of the case on the Tengratila gas field blow-out."

Niko-operated Tengratila gas field in Sunamganj blew out on two occasions in January and June of 2005 when the company was drilling at the field.

The government has already filed a case against the Niko seeking about Tk7.59 billion compensation for Tengratila blow-outs. The case is now pending in the court.

Bangladesh is facing more than 200mmcfd of gas supply shortage over the last couple of years, which hampered power generation, industrial growth and other development activities.

All the operative gas fields produce about 1760mmcfd of gas in total against the demand for about over 2000mmcfd.