Niko has reached an understanding with US company Century which has rented out a rig to Unocal at Moulavibazar gas field.

Century will mobilise the costly rig to Tengratila late this month, Niko officials told officials of the energy ministry and Petrobangla at a meeting.

As per its draft plan, Niko will drill the second relief well from a new location and plug the main oil, meeting sources said.

Niko was drilling a relief well that caught fire due to a blowout on June 24 and the blaze still rages.

The January 8 blowout took place when Niko drilled around 800 metres with only 300 metres of concrete casing in the well. In case of the Magurchhara blowout, US company Occidental had resorted to a similar faulty operation with smaller concrete casing.

Niko was then lucky that the subsequent blaze was automatically tamed within a week but the area was left with numerous cracks. In the absence of government pressure on the company, it took a long time to begin drilling a relief well to repair the damaged main well.

The delayed drilling of a relief well allowed enough gas in the damaged gas field to seep out to different points and accumulate, creating heavy upward pressure resulting in the second blowout, experts say.

Niko will now have to drill a relief well to reach the first blowout point at a depth of nearly 800 metres.

The two blowouts led to a huge gas loss for Bangladesh while Niko had all its losses covered by insurance.

During the first drilling, the company had a $20 million insurance coverage against its estimated expenditure of $15 million. When it started relief well operation, it arranged a fresh $20 million coverage, sources pointed out.

"The issue with Niko is its inability to carry out such an operation properly and sincerely. But the company have to do so this time, no matter how much it costs them," said an official who was present at yesterday's meeting.

Another official said, "Even if they (Niko) start their remedial operation this month, the actual spudding of the relief well will take place much later. The rig now deployed at Moulvibazar gas field will be available when Unocal completes using it. Then they will dismantle it and finally mobilise it. It will need at least two months to get this rig at Tengratila."

Niko started drilling at this abandoned field in December last with a target of reaching 1,700 metres.

In the wake of the first disaster, the government had formed to probe committees.The committees came up with the view that the first blowout caused a loss of more than 10 billion cubic feet of gas worth $2.5 million dollars and caused widespread environmental damage.

This time also the government formed two committees which are investigating the disaster.

Tengratila field is located in an unexplored gas field area that was given to Niko violating a number of rules and harming the interest of the nation. It is estimated that the affected area in this field has over 150 billion cubic feet of gas while it has a much bigger reserve further down.