In the Compensation Case For the 2005 explosion,Bangladesh Secures Partial Compensation from Niko

Bangladesh has been awarded partial compensation in the long-standing dispute over the 2005 explosion at the Tengratila gas field in Sunamganj. The International Centre for Settlement of Investment Disputes (ICSID) has ordered Canada’s Niko Resources to pay Bangladesh USD 42 million, approximately BDT 512 crore.

The Bangladesh government, in coordination with BAPEX, had initially sought compensation amounting to USD 1.014 billion (roughly BDT 12,371 crore), citing extensive gas flaring and environmental damage caused by the explosions. While the full ICSID award has not yet been published, a summary obtained via legal counsel confirms the settlement figure of USD 42 million.

Muhammad Fauzul Kabir Khan, Adviser on Power, Energy, and Mineral Resources, confirmed the preliminary compensation news and stated: “We will review the detailed ruling and decide on subsequent actions accordingly.”

Tengratila Gas Field and 2005 Explosion Overview:

The 2005 explosions destroyed a significant portion of the gas field, causing extensive damage to surrounding infrastructure and assets. The compensation lawsuit was first filed domestically in 2007 through Petrobangla. The High Court ordered the seizure of all Niko assets in Bangladesh and annulled the operating agreement. The Supreme Court later upheld Petrobangla’s position.

In 2010, Niko filed an ICSID arbitration, denying liability. Subsequent surveys by BAPEX in 2016, conducted under international expert supervision, informed the final compensation claim presented to ICSID.

The awarded amount has attracted criticism at various stages, with national committees and other stakeholders arguing that actual damages were far greater. Observers suggest that procedural lapses in the initial case limited the compensation received.

Petrobangla has indicated that although the western section of the Chatak field was destroyed, other layers and the eastern portion remain intact, with estimated gas reserves between 2 and 5 trillion cubic feet.

Following receipt of the ICSID ruling, the government, with legal advice, plans to proceed swiftly. Key measures under consideration include launching new drilling initiatives and implementing a Development Project Plan (DPP) to optimise remaining gas extraction.