Thursday, June 30, 2005

Yet another blown-up gas well

So now Niko Resources' well has blown up again. Not only that, but it will certainly cost Bangladesh hundreds of millions of dollars . All due to Niko's negligence:

According to the estimates of the explorers, the gas reserves below the first layer at 550 metres are no less than 115bcf and the gas loss has been initially forecast at Tk 1,150 crore ($185m). But experts now fear that this major blowout might have destroyed the vast structure in its entirety, killing chances of further commercial extraction.

"The loss of gas reserves alone would be double than what has been predicted in the media. The 260bcf gross reserves will be no less than Tk 2,600 crore ($322 million) at current market rate," a top Bapex official said, wishing anonymity in fear of possible wrath from a powerful lobby that has sided with Niko all the way to the disasters, environmental damage of which is yet to be assessed.


Ah yes, there's that powerful lobby again. Hardly surprising that the government is taking no action at all against Niko for the latest fiasco:

Geologists and drilling experts have no hesitation in singling out Niko for the twin Tengratila disasters and expressed shock at the strange reaction of energy ministry Adviser Mahmudur Rahman who blasted none but two local companies for monitoring failure before suspending two officials of Bapex-- the partner of the highly controversial explorer Niko.


And this time, there's no question that it was sheer negligence and incompetence on Niko's part:

A Petrobangla expert said Niko committed the same crime twice, nakedly exposing their dubious credentials as explorers. The first blowout took place due to faulty well design and wrong drilling while the second was the consequence of the post-blowout mishandling by Niko, he said. He observed that Niko was too sluggish to drill a relief well after the first blowout on January 7, possibly turning about 100sqkm area around the structure into a virtual 'minefield' for any exploration. A relief well should be drilled immediately, preferably within a week, after any blowout, Imam said. But Niko sat on it for six months to let the gas channel through ground layers and then drilled the relief well up to 350 metres when a sudden kick from high-pressured gas pocket led to the blowout.

Well, I am once more disgusted but unsurprised. The sad thing is that this is how the system works in Bangladesh. Corrupt politicians and bureaucrats exist only to rape the country and line their own pockets. The only thing that went wrong this time is that they got a little too greedy and it literally blew up in their faces. But even then, nothing will happen. The only difference is that we can all see what's going on for once.

Tuesday, January 18, 2005

Freedom of the press? Pardon me while I laugh

In the last week, practically no coverage has been given to the Niko Resources gas well explosion other than to report that the wasted gas probably amounts to 'only' 40 million Takas. Oh, and Niko Resources is giving the huge sum of 5000 Takas to each family which had to evacuate their homes because of the fumes and risk of fire. How generous. Good on you, Niko!
What about the awarding of a gas field to this company without a PSC stipulating real liability? Don't these deserve even a single line of newspaper ink? Oh, wait, I almost forgot, this is Bangladesh.

Tuesday, January 11, 2005

Told you so!

According to yesterday's Daily Star, it will be impossible to hold Niko Resources accountable for the exploding gas well because the government never asked it to sign a Production Sharing Contract (PSC). Big surprise. Anyone care for a banana?

Sunday, January 09, 2005

Welcome to the Banana Republic of Bangladesh!

Another day, another exploding gas well. Niko Resources, a questionable gas company whose political connections alone enabled it to drill in Bangladesh, has just had a well explode on it. Hardly surprising, considering that the same thing happened to Occidental a few years ago, and Occidental is one of the bigger, more professional oil multinationals. Niko Resources on the other hand was initially disqualified from bidding for gas blocks in Bangladesh, presumably because the government gas department, Petrobangla, thought they were too small and inexperienced an outfit.

But according to today's Daily Star, Niko was ultimately given permission to drill without even signing the standard Production Sharing Contract that other gas companies have to agree to. All thanks to influence peddling behind the scenes. Here's how the Daily Star put it:

In a further twist, it is alleged that the gas field itself was arbitrarily given to Niko in October 2003 violating government rules. Niko... had deployed a drilling company which is represented by a top leader of a certain bhaban. It is alleged that this person had earlier forced Petrobangla to award it this gas field... through a joint venture with Bapex. Once considered by Petrobangla unsuitable for gas exploration, Niko is the only foreign oil company to operate in Bangladesh without any Production Sharing Contract (PSC). Niko was given this field despite it having been ring-fenced for future operations by Petrobangla, and US company Unocal had the first right to get exploration right as it operated in that area. The oil company was disqualified by Petrobangla's evaluation in the second round block bidding in 1997.


The Daily Star report also mentions the previous gas explosion that Occidental was responsible for (not that it cost them anything of course):

The US company Occidental was found responsible for the Magurchhara explosion, but the company was allowed to sell out its concerns to Unocal and leave Bangladesh in 1999 following an extension of its PSC through a supplementary contract. Petrobangla demanded $685 million in compensation for damages from Unocal in 2002, but Unocal so far has not paid anything. Instead the company claimed that the compensation has been "paid" through the supplementary contract."



Well, this is just wonderful. If you give a contract to an oil company and they blow up your well, of course they should be liable. But in Bangladesh they're not, because in Bangladesh no one is liable for anything. And of course if the government gives a contract to an oil company whom they know to be incompetent, then the government should answer to the people for that when things go wrong. Particularly the responsible "top leader of a certain bhaban", even if he's the son of the Prime Minister. But of course, that will never happen.

Welcome to the Banana Republic of Bangladesh.