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DGPC allegedly involved in discouraging local gas production

DGPC allegedly involved in discouraging local gas production

ISLAMABAD: Directorate General Petroleum Concession (DGPC) Imran Ahmed has so far allegedly created hindrances towards injecting 30 million cubic feet per day (MMCFD) of gas from Badin IV South gas fields and caused approximately $ 50 million dollar loss to the country, Customs Today has learnt.

According to documents available with Customs Today 30 million cubic feet per day (MMCFD) of gas was discovered from Badin IV South gas fields earlier and this gas was to be injected in the system six months back. However, the DGPC has not allowed injecting the gas into the system due to a controversy of 25 cents per MMBTU (Million British Thermal Unit) in the pricing of the gas of Badin IV South gas fields.

Due to not injecting 30 MMCFD of gas of Badin IV South gas fields, the country, which is faced with gas crisis, has so far faced approximately $ 50 million dollar loss due to the import of expansive LNG to the country. DGPC has allegedly been involved in discouraging new discoveries of local gas production and paving the path for the imported expensive gas to the country.

According to sources, DGPC wanted to set 25 cent per Million British Thermal Unit (MMBTU) less price of gas for Badin IV South Gas Fields though it was a marginal gas field in nature as per a third party report. They said that the third had party recommended to set the pricing formula of this gas field in accordance with Gas Pricing Criteria and Guidelines, 2013 and recommended to set six dollar and 25 cent/MMBTU price for gas of Badin IV South Gas Fields. However, DGPC Imran Ahmed and a former consultant of DGPC Ishaq Saqi have allegedly created hindrances by not allowing setting the price of a marginal gas field for Badin IV South Gas Fields and as a result 30 MMCFD gas could not be injected into the system, said sources.

“Due to not injecting 30MMCFD gas in the system from the last six months, gas crisis to some extent has emerged in the country as Compressed Natural Gas (CNG) and commercial sectors have currently been shutting up, besides the closure of industry and shortage of gas to zero-rated industry amid winter season,” said sources.

They added that though DGC has been not allowing injecting the gas of Badin IV South Gas Fields due to 25 cent controversy in pricing with a private exploration and production (E&P) company, yet with local gas production/discovery usually job opportunity is created in the area where the wellhead is located while the gas producing province can earn 12.5 percent under the head royalty, government can earn 17 pc GST, and local community can earn rent money over the use of their land. Moreover, E& P company has to pay corporate tax on local gas production as the E&P company does not take all price of the gas.

“After deduction of all taxes over the local gas production, the price of local gas usually stands at $ 4 dollar/MMBTU,” said sources, adding, that the government has been importing expensive gas (Liquefied Natural Gas) that costs a $10 dollar to the country, and in accordance to an estimation the country has so far paid $ 50 million dollar additional amount to foreign country over import of LNG ostensibly.

Documents available with customs Today said that a third party named as IPR International Ltd (Pakistan) was earlier nominated by DGPC to inspect the field before signing gas sales, purchase agreement with Exploration and Production (E&P) company. And, IPR International Energy Group inspected the gas field sites and declared in its report submitted before DGPC that Badin IV South Gas Fields are marginal in nature. However, DGPC and a former consultant raised objections on its (IPR) report and once again asked international reputed firm-IPR International Energy Group- to inspect the field once again. The IPR once again inspected the field and submitted report before DGPC.

IPR in its report once again declared that Badin IV South Gas Fields were marginal in nature and their pricing should be set in accordance with Gas Pricing Criteria and Guidelines, 2013. However, DGPC has so far not allowed injecting the gas of Badin IV South Gas Fields into the system.

Documents further confirmed that internationally reputed energy group IPR International had submitted its report before DGPC two times and established that Badin IV South Gas Fields are marginal in nature in accordance with the Marginal/Stranded Gas Fields-Gas Pricing Criteria and Guidelines, 2013.

When contacted DGPC for his official response, he said, “Messrs PEL submitted third party certifications, for the three discoveries, carried out by Messrs IPR International and AGR Tracs International. All the three cases were examined keeping in view the provisions of Marginal/ Stranded Gas Fields – Gas Pricing Criteria and Guidelines 2013 as well as the findings/recommendations of the third-party certifications and subsequent clarifications submitted the Messrs IPR International Ltd through their offices in Texas and Islamabad.”

He also said that “As per aforementioned guidelines, the Marginal Fields Gas Prices will be set in accordance with Petroleum Exploration & Production Policy 2012 with an additional premium of US$ 0.25 MMBTU for the three zones as defined in Petroleum Exploration & Production Policy 2012.”

It is pertinent to mention here that DGPC in his written response has admitted that IPR was nominated by his office (DGPC) for inspection of the gas fields and IPR in its report declared the gas fields as marginal in nature. And, despite the submission of report by IPR has asked the E&P company to inject the gas in the system first while the price of these gas fields will be settled later on, which clearly shows the incompetence of DGPC and discouraging the E&P company engaged in the field for discovery and production of local gas besides establishing his invisible intention to promote import of expansive gas to the country. Moreover, this attitude towards dealing with E&P company has raised questions about the role and performance of DGPC.