AHMAD AHMADANI

ISLAMABAD - Ogra declining to purchase raw gas at accelerated pace in the interest of consumers has maintained that Latif gas field’s production plan will result in early depletion of gas field and will only benefit the Joint Venture Partners in terms of fast track pay back of entire investment as well as time value of money.

Sources privy to the matter informed TheNation that Oil and gas Regulatory Authority (Ogra) protecting public/ consumers interest has pleaded to review Latif gas field’s accelerated production plan as its accelerated pace will result in early depletion of gas field and will only benefit the Joint Venture Partners in terms of fast track pay back of entire investment as well as time value of money. Influential lobby is all out to get the approval from the Economic Coordination Committee (ECC) of the Cabinet which is however likely to stop Latif gas field’s accelerated production plan in the better interest of over burdened gas consumers already facing unscheduled long hours outages and low gas pressure coupled with the imposition of undue tariff on the commodity after each passing day.

“A meeting on purchase of raw gas from Latif gas field was held under chairmanship of Minister for Petroleum and Natural Resources on 21st December 2011 where Deputy Chairman Planning Commission, Secretary Petroleum, Chairman Ogra also participated”, official sources disclosed on the condition of anonymity, adding, that during the meeting, Ogra briefed the meeting that purchase of raw gas from Latif producers at accelerated pace will result in early depletion. Ogra has so far left no stone unturned to save the gas consumers owing to expected higher tariff from Latif field, sources said. Available documents further revealed that pipeline worth Rs2.5 billion to be laid by gas company may also need to be depreciated on a fast track basis, depending on the life of field and accelerated depletion expenses in such case may exceed. This will adversely affect the gas consumers at large who will suffer owing to higher tariff from Latif field.

“Ogra fully support by Deputy Chairman Planning Commission’s viewpoint that economic benefit of project calculated in terms of furnace oil replacement is incorrect. In fact, the additional gas will be supplied to highly subsidised domestic and CNG sectors. Also, view points in respect of early depletion of field which will be impacting future generations is fully supported”, official document reads, adding Ogra maintains that Latif gas field’s accelerated production plan project needs to be revisited.

Earlier, considering widening gap between supply and demand on the utility network, Petroleum Ministry said that it is imperative that the gas utility companies (SNGPL/ SSGC) be allowed to accept Latif gas into the system by laying 50 kms pipeline, with the following modalities; (a) SSGC/ SNGPL will buy raw gas from Latif field at field gate from Latif JV; (b) to transport raw gas from Latif field, SNGPL and SSGC will jointly lay and own 50 kms long pipeline from Latif field gate to Sawan plant which will include pig launcher, receiver and cathodic protection system etc. Further, the Ministry of Petroleum and Natural Resources has earlier decided to transport raw gas from Latif Well through a transmission line to Sawan plant, and the total estimated cost of 50 Kms, pipeline was earlier estimated as Rs 2.308 billion by SNGPL which was expected to be equally shared between SNGPL and SSGC.

Presently, there is acute shortage of gas on SNGPL/ SSGC system so both utilities have held lengthy negotiations with Latif JV to find a way forward to produce additional gas from Latif field. As a result of these discussions, SNGPL/ SSGC have proposed to buy raw gas at Latif field gate and take it to Sawan plant for processing thus designating the pipeline network from Latif field to Sawan plant as transmission pipeline.

Reportedly, the Petroleum Ministry is of the view that if new avenues to process raw gas from Latif field are not found, the gas network will lose additional gas to the tune of 50-70 mmcfd. To continue producing gas from Latif field as per current projections, an option of taking Latif gas to nearby Sawan plant has been explored. However, Latif JV has so far categorically declined to make additional investment on construction of pipeline connecting Latif field to Sawan plant or to put up a new processing plant as Latif JV has already made substantial investment connecting Latif field to Kadanwari plant; and further additional investment on new pipeline from Latif field to Sawan plant is not economically feasible due to low gas price (presently, capped at $2.64/mmbtu) as allowed under Petroleum Policy 2001.