Bangladesh’s state-run oil and gas explorer BAPEX has been ordered to pay around US$42 million to Azerbaijan-based Socar AQS LLC in an international arbitration case over a failed gas drilling project.

The Singapore International Arbitration Centre (SIAC) issued a partial final verdict directing Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) to compensate Socar for disputed payments linked to the drilling of the Semutang South-1 gas well, BAPEX Managing Director Md Fazlul Haque confirmed.

BAPEX plans to appeal the decision. If the ruling stands, the payment may rise by an additional US$3.16 million in arbitration-related costs, pushing the total potential liability to nearly US$57 million.

The dispute stems from a contract signed in 2017 under which Socar was hired to drill three onshore gas wells for approximately US$33 million. The only well drilled—Semutang South-1 in Khagrachhari—was found dry. Socar was paid US$11.8 million for the work.

Socar terminated the contract in 2019, citing delayed payments, and lodged the claim at SIAC in 2020. It sought nearly US$73 million in compensation. The tribunal fully upheld two claims, partially upheld five, and dismissed four.

This marks the first time Bangladesh has lost an international legal dispute to a foreign oil company over gas-well drilling. Officials allege poor contract terms and a lack of legal vetting contributed to the outcome.