ISLAMABAD:
As the Oil and Gas Regulatory Authority (Ogra) has not been able to operate effectively in the absence of member gas, exploration companies, which have invested millions of dollars, are facing a financial crunch as they are supplying gas to the distributors but are receiving no payments.
Polish Oil and Gas Company (POGC) is one of the companies that has invested $77 million in exploration work and is supplying tight gas to Sui Southern Gas Company, but gets nothing in response, say sources.
The company, which says that Ogra has not yet announced the gas price causing the delay in payments, is producing 10 million cubic feet of tight gas per day and plans to ramp up production to 100 mmcfd. It is the first company that has discovered tight gas – gas found in rock formations which is difficult to extract – and supplied it to the gas pipeline network after announcement of the tight gas policy by the previous government.
In June 2005, POGC got Kirthar exploration licence and found tight gas in Rehmat-1 well in July 2009 and Hallel well in December 2011. State-run Pakistan Petroleum Limited is POGC’s joint venture partner with a 30% working interest.
After promulgation of the Tight Gas Exploration Policy 2011, the Polish company was given the right of incentives.
In an attempt to encourage exploration companies to tap tight gas reserves, the policy says that 40% premium will be given over the zonal price of Petroleum Policy 2009 and an additional 10% premium will be offered on the gas that is brought into production within two years of announcement of the policy.
According to sources, POGC has been producing 10 mmcfd since June 25 this year in a bid to determine the size of the reserves. After that, it will be able to place the commercial discovery before the government for approval.
The director general gas has requested Ogra to announce a provisional price for the tight gas. However, in a letter to the DG gas, Ogra has sought a sample of calculating the price.
“Owing to lack of quorum, Ogra is currently dysfunctional, hence the case of Polish gas company for setting a provisional gas price shall be determined after induction of member gas which will complete the quorum,” a source quoted Ogra as saying in its reply.
“Price notification is pending due to lack of quorum. We have determined the gas price of Polish company and are waiting for appointment of member gas to notify the price,” Ogra Chairman Saeed Khan told The Express Tribune.
The price would be announced as soon as the government appointed a new member gas, he said.
When approached, a cabinet division official, who asked not to be named, said the process of appointing the member gas was going on and would possibly be completed in a week.
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