Hasan Azad, Dhaka: Bangladesh has made a move to collect evidence from the Royal Canadian Mounted Police (RCMP) against multinational oil and gas company Niko, making it liable for two gas well explosions that occurred in 2005.
The collected evidence will be presented in a case waiting for arbitration at the International Centre for Settlement of Investment Disputes (ICSID).
Bangladesh-Petrobangla and Niko are locked in an arbitration battle in the ICSID, in which, the latter is seeking to clear its name from any responsibility for the explosion and avoid compensating Bangladesh.
To gather evidence from Canadian police, Petrobangla has already sent a proposal to the energy division. The proposal is now at the law ministry to get opinions and vetting. Once done, it will go to the Prime Minister for final approval.
Regarding the matter, Petrobangla Chairman Nazmul Ahsan told the Business Insider Bangladesh that their legal consultants gave them the idea to collect evidence from Canadian police. “Next step will be taken once final approval on the move comes.”
An official related to the case said Derek C Smith of US law firm Foley Hoag LLP is representing Bangladesh in the ICSID case.
The official said Smith in February this year sent an email to authorities concerned suggesting Bangladesh gather evidence from Canadian police. The collected evidence will help Bangladesh in the ICSID arbitration.
The evidence to be collected from Canadian police includes filmed interviews of senior Niko officials and affidavits. Besides, materials from the FBI, US Department of Justice, City of London Police, eight legal requests for World Bank assistance, sixteen production orders and interviews of 20 other people may also be collected as evidence.
These can be collected through mutual legal assistance channels that exist between Bangladesh and Canada. Canadian police are also willing to assist the tribunal by providing evidence.
To go help conduct all the process, law firm Foley Hoag also suggested that Bangladesh appoint Ferdous Khan, partner, Octokhan Chartered Accountants and Consultant and former FBI supervisory special agent Debra LaPrevotte Griffith. Ferdous Ahmed Khan is currently working as a special assistant to the prime minister.
Khan and Griffith were witnesses for Bangladesh-Petrobangla in the ICSID case. They are also experts in corruption and money laundering issues and worked in many cases with Canadian police.
Leading to the case:
On 11 April 2001, Bangladesh and Petrobangla signed a Production Sharing Contract with Tullow Bangladesh Limited, Chevron International Bangladesh Limited, Texaco Exploration Asia Pacific Pathfinding Inc and BAPEX.
At the same time, Tullow, Chevron, Texaco and BAPEX signed a Joint Operating Agreement (JOA) among themselves.
According to the JOA, the equity shares amounted to 30 percent for Tullow, 30 percent for Chevron, 30 percent for Texaco and 10 percent for BAPEX (carried interest).
However, in 2003, Texaco sold all its shares to Chevron. The same year, Chevron sold all its 60 percent shares to Niko Resources.
Later, a Niko-Bapex joint venture took a contract to extract gas from Chhatak’s Tengratila gas field.
On January 7, 2005, while Niko was drilling in the gas field, a fatal explosion occurred causing extensive damage to the environment in the gas field and its adjacent areas. Another blast occurred on June 24 of the same year.
Niko later filed an arbitration lawsuit in ICSID seeking a declaration that they were not responsible for the explosion. Niko also seeks to be paid for gas it delivered from 2004 to 2010 to Bangladesh.
However, in 2016, BAPEX conducted a survey through a committee of international experts to assess the damage.
Following the assessment, BAPEX took to ICSID demanding $118 million from Niko, while the Bangladesh government demanded $896 million.
Niko also face a negative High Court (HC) verdict in 2017. Energy Adviser of the Consumer Association of Bangladesh (CAB) Professor Shamsul Alam filed the case over the legality of Niko’s contract.
The verdict declared Joint Venture Agreement between BAPEX and Niko, and Gas Purchase Sales Agreement between Petrobangla and Niko to be unlawful and ordered the contracts to be cancelled. At the same time, the HC also ordered all Niko’s property in gas field block-9 to be confiscated.
However, Niko appealed against the order and the case remains pending to this day.