The New Nation - Internet Edition

BUSINESS REPORT

The government has decided to withdraw the case filed by state-run Bangladesh oil, gas and mineral corporation Petrobangla against US-based energy firm Chevron Corporation, a senior official said yesterday.

Petrobangla filed the case in a Dhaka court last year as the US firm lodged an arbitration suit over a debate on transmission charges for gas supply from a field in Bangladesh.

The government will face the arbitration suit with the International Centre for Settlement of Investment Disputes (ICSID), an institution of the World Bank group, the official said.

"We will withdraw the case from the local court and will face it in the ICSID as our counsellor suggested," said Jalal Ahmed, chairman of Petrobangla.

"The counsellor also suggested for an amicable solution. We have already opinion from the law ministry in favour of our counsellor," Jalal said just before leaving for the Netherlands to attend the hearing on Tuesday.

Bangladesh was not prepared to face the issue on August 5 and hence requested to defer the arbitration till on October 23.

But the ICSID set condition to withdraw the case to defer the hearing, the official said.

Chevron filed the suit with the ICSID demanding back 4 per cent of the gas sales proceeds from the Jalalabad gas field it had paid to Petrobangla as transmission charges.

If the government loses the arbitration, Chevron would get at least $40 million from the Jalalabad gas field and Moulvibazar and Bibiyana fields which have a combined reserve of more than 3 trillion cubic feet of gases, officials said.

"The arbitrary imposition of a 4 percent tariff for natural gas sold to Petrobangla led to the filing of a case by Chevron in the ICSID," Chevron said in a statement yesterday.

Chevron in Bangladesh filed for ICSID arbitration in March 2006 after the parties were unable to settle dispute amicably, the statement said.

"All the agreements t specifically require ICSID arbitration for dispute resolution, with no avenue for use of Bangladeshi courts," the statement said.

"Such disputes are potentially damaging to foreign direct investment, as many international investors are closely watching the outcome of this case," it said.