As per the initial deal signed ahead of the Gas Purchase and Sales Agreement (GPSA) with the state-owned Bangladesh Petroleum Exploration Company (Bapex), the government will purchase gas from Niko's Feni gas field at $ 1.75 per 1000 cubic feet (mcf).

However, the signing of the final GPSA is subject to getting the energy ministry's nod and the completion of vetting by the law ministry.

Niko Country Manager Brian Adolph, Bapex Managing Director Jamaluddin Ahmed and Senior General Manager of Petrobangla Jahangir Kabir initialled the deal on behalf of their respective sides at a function at Petrobangla office.

Petrobangla Chairman Mosharraf Hossain Bhuiyan and other senior officials were present.

Niko has developed Feni gas field under a joint venture with the Bapex, a subsidiary of the state-owned Petrobangla.

The Canadian company started production at the gas field in November 2004 and has so far produced about 15.5 billion cubic feet (bcf) of gas.

But due to a discord over the price of gas, the Feni field operator has been supplying gas to the government without the cover of any agreement considering the heavy domestic demand.

At one stage, responding to a request from Niko, the government paid $ 4.0 million to the Canadian operator on an interim basis without fixing the price.

From the very beginning of production at the Feni field, Niko was insisting on a price of $ 2.75 per mcf and then proposed $ 2.35. But the government remained firm to fix the price at $ 1.75 per unit.

Niko finally accepted the government offer and signed the initial deal.