Pangladesh Petroleum Exploration and Production Company (BAPEX) remains inactive on the Chhatak Gas Field despite the resolution of a longstanding legal dispute.
BAPEX Managing Director Md Shoeb stated that any premature action could lead to further legal entanglements, as advised by their legal counsel.
According to a BAPEX source, the International Centre for Settlement of Investment Disputes (ICSID) in London is expected to issue an award-related order by mid-January.
This follows a series of disputes and legal battles over the gas field, which was initially discovered in 1959.
The field was exploited to supply gas to the Chhatak Cement and Paper Mills until it was shut down due to water intrusion after extracting 26.46 billion cubic feet of gas.
In 2003, BAPEX signed a contract with Canadian company Niko for the development of the field.
However, two devastating explosions in 2005 caused severe damage, prompting legal action by Petrobangla against Niko.
Both the High Court and the Supreme Court of Bangladesh ruled in favour of Petrobangla, seizing Niko's assets in Bangladesh.
The case escalated to the ICSID, where in February 2020, the tribunal held Niko responsible for the damages and ordered compensation to BAPEX and the Bangladesh government amounting to $118 million and $896 million, respectively.
The final award on environmental and other damages is expected soon.
Former MD of BAPEX, Amzad Hossain criticised the delay, arguing that paperwork for the project could have been prepared in advance to avoid further delays once the legal hurdles were cleared.
He stressed the urgency of resuming operations given the country's declining gas reserves.
Chhatak Gas Field, divided into Chhatak East and West (Tengratila), is believed to hold 2 to 5 trillion cubic feet (TCF) of gas.
Despite past damages, other layers of gas and reserves in Chhatak East remain untouched.
Currently, the country's gas production has dropped from a daily output of 2,800 million cubic feet to 1,932 million cubic feet.
Petrobangla has been importing LNG to bridge the gap, but the shortfall persists, with daily demand outstripping supply by approximately 1,200 million cubic feet.
Petrobangla's proposal to hike gas prices by 152% for industrial and captive users underscores the urgency for better planning and increased domestic gas production, a sentiment echoed by energy experts.
