Petrobangla officials considered the action on the part of Niko as "a serious attempt to blackmail" the government.

In a letter yesterday, Petrobangla asked Niko to immediately restore gas production in the field and resume supply to the government.

Petrobangla also viewed the Niko's action as a breach of the terms of JVA (joint venture agreement).

It said any breach of the terms of JVA "might constrain us to take any serious step under the law of Bangladesh."

On Monday, Niko Resources, the Canadian operator of Feni and Tengratila (Chhatak) gas fields, halted its gas production and supply from the Feni field demanding immediate settlement of the gas price issue and payment to the company for gas purchase.

Petrobangla's director (PSC) Raihanul Abedin told the news agency that the organisation would never allow any illegal pressure or threat from the Canadian operator.

In its latter to Niko, Petrobangla also mentioned: "We are carefully scrutinising the draft GPSA (gas purchase and sales agreement)...If the shutdown has any connection with finalisation of the GPSA, it appears to be unnecessary at this point of time when negotiation has not even started."

The conflict over the gas price issue remained unsettled since commencement of Niko's gas production from Feni field, which had been producing about 20 mmcf gas per day.

Earlier, Petrobangla made a partial payment against its gas purchase from Feni field at an interim price. But later, a court order halted all kinds of government payment to Niko.

Niko demanded of the government to support it in its legal battle to removing the court order.

But such a demand by the Canadian operator was dismissed by Bapex, the state-owned petroleum exploration wing of Petrobangla, with which Niko signed the JVA to develop Feni and Tengratila gas fields.