He also formed a seven-member probe committee without any drilling expert although the Tengratila blowout is mainly due to drilling flaws.

At the directive of the adviser, Bapex (Bangladesh Petroleum Exploration Company) yesterday suspended two field level officials attached to Niko's Tengratila relief well construction, sources said.

These two officials, for 15 days by turn, oversaw the operation on behalf of Bapex. One of them had returned to Dhaka after his duty a couple of days before the fresh blowout and the other was prepared to visit the spot from Sylhet but Niko, which arranges the visit, had not taken him, the sources mentioned.

"They were not responsible for any negligence," said a source in Petrobangla's affiliates. "If the government must punish anyone, it should be people who are responsible for forcibly making Bapex sign the faulty joint venture agreement with an incompetent and disqualified company like Niko."

Found disqualified in technical and financial aspects during the evaluation of the second round block bidding in 1997, Niko's negligent operation led to the first blowout at this unexplored gas field in January this year.

The adviser yesterday held his first meeting with officials of the energy ministry and top officials of Petrobangla and nine of its affiliates, including Bapex.

Meeting sources said Mahmud was very annoyed with Petrobangla and Bapex, and he also reprimanded energy ministry officials for not taking up the Tengratila issue with top priority.

He mentioned that no senior officials of the energy ministry, Petrobangla or Bapex went to Tengratila till 10 am Friday. Even none of them informed him about the blowout, he said at the meeting.

He also conveyed the displeasure of the prime minister on the issue.

The adviser stressed that Petrobangla and Bapex should have been alert all the time in the wake of the first Tengratila blowout.

He blasted the gas companies, including Titas Gas, for theft of gas and system loss.

Mahmud said told the meeting that the government is planning to hold the third round block bidding on oil and gas exploration in December.

Discussing Indian giant Tata's investment, he said Tata will set up a coal-fired power plant in northern region of the country.

Probe Body
The seven-member probe committee headed by Dr Anwarul Azim has a mandate to submit its report within 15 days.

The committee lacking any drilling expert and dominated by chemical engineers has been asked to find out to what extent both Niko and Bapex had been negligent in handling the relief well.

The committee will also assess how much property loss has been caused by Friday's blowout at Tengratila.

The committee consists of Joint Secretary of the energy ministry Sheikh Abdur Rashid as its member-secretary. Its members are Prof Nurul Islam, Kazi Shahid, Rahman Morshed, Moinul Haq and Fazle Elahi. Of them, four are chemical engineer and one is a geologist.

"This is not a case of chemical disaster. This is a drilling disaster. Although some of these members are very competent, this committee will not serve the purpose," noted an energy expert.

Sources said the second blowout at Tengratila took place because there was a cave in of the gas layer when Niko was drilling the relief well. "Experts believe that they (Niko) once again failed to properly design the casing for the relief well," one expert pointed out.

Niko's agreement
Yesterdy's meeting did not however discuss the flawed agreement of Niko that makes the small company unaccountable to Petrobangla, which supervises and coordinates deals with other oil companies like Cairn or Chevron Texaco (previously Unocal), sources said.

Niko is the only foreign oil company to operate in Bangladesh without any PSC. Desperate to bag business in Bangladesh, it is operating through a unique joint venture agreement (JVA) with Bapex. Bapex is a partner without any equity.

The JVA was signed in the name of developing three 'marginal' or previously used gas fields. However, one of these three -- Tengratila field (originally known as Chhatak field) -- is an unexplored gas field. Under the government policy, an unexplored gas field should be developed through PSC, if awarded to a foreign oil company.

This agreement was resisted by Petrobangla as it is full of loopholes, but the Bapex signed it under heavy pressure from the then state minister for energy AKM Mosharraf Hossain and lobbies close to the 'alternative source of power' in the government.

As per the JVA, the government through the Bapex, not Petrobangla, would supervise the technical aspect of Niko's operation. But being a partner, Bapex cannot supervise Niko's activities. The JVA also did not lay down any organised procedure for such supervision. The JVA at no point involves Petrobangla in the operation.

In contrast, the PSCs are designed with a clearly defined monitoring and supervision task for Petrobangla. This is why Petrobangla had repeatedly resisted the JVA till it was signed.

Sources pointed out that Bapex's monitoring of the Tengratila operation could not have helped anything. Neither Bapex nor Niko has the knowledge or skill to handle a blowout situation.

"There are a few companies in the world that can handle gas field blowout issues. One of them is Canadian company GSM. Niko has hired a GSM expert to oversee the relief well construction. The blowout took place in his presence," said one source.

Tengratila gas field was originally known as Chhatak field that was developed in the late fifties by the then petroleum authorities. The field produced gas till 1989 and then it was sealed off considering the existing reserve was commercially non-viable for extraction with the technology available back then.

Niko's Statement
Meanwhile, in a press statement, Niko Resources Bangladesh President Qasim Sharif said, "We are actively formulating our future action plans and we would like to present these options to Bapex, Petrobangla and the government within seven days. Upon receipt of necessary government approval, we will implement our action plan and initiate operation within 15 days. We have already sourced a drilling rig for this purpose."

Chief Operating Officer of Niko Canada William T Hamaday reached Dhaka yesterday to lead these efforts.

Qasim pointed out that the deputy commissioner of Sunamganj in a report yesterday said Niko should pay compensation of Tk 1.13 crore to people of Tengratila. "We have agreed to provide this money," he said.

"The first part of this amount is being forwarded to the government at this time. In addition, and not included with the above amount, we are forwarding Tk 6,60,000 as our contribution for the mosques and other places of worship in the Tengratila area."