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Gas pricing, gas sales agreements signed

ISLAMABAD: The government and Sui Southern Gas Company Limited (SSGCL) have signed gas pricing agreement (GPA) and gas sales agreement (GSA), with BHP Petroleum (Pakistan) Pvt Limited and its venture partners Premier Exploration Pakistan Limited, Lasmo (MP) Limited and Government Holding.

On behalf of the president of Pakistan, the agreements were signed by the Federal Secretary, Ministry of Petroleum and Natural Resources, while SSGC Managing Director and the Director of General (Petroleum Concessions) signed on behalf of SSGC and Government Holdings, respectively.

Gas supplies from Zamzama field will be under the new gas price package recently approved by the government to facilitate the speedy development of new gas discoveries.

The gas price is indexed to international oil prices (basket of crude oils imported into Pakistan).

The price package provides a floor of $10 per barrel and a ceiling of $15 per barrel.

In case of increase in oil price beyond $15 per barrel there will be a discount of 50 percent between fraction of $15 per barrel and $20 per barrel, while between $20 and $25 per barrel and $30 per barrel a discount of 70 percent and 80 percent, respectively, will apply over the corresponding fraction.

In view of he prevailing crude oil prices, there will be a saving of about $17.5 million per annum to the government from the utilisation of about 70 MMCFD of Zamzama gas, as per price package, as compared to the price under the 1994 Petroleum Policy. Simultaneously, it will allow the operator an early return on its investment and is considered a 'win situation' for all parties.

These agreements will allow BHP to carry out 'extended well test' (EWT) to determine reservoir characteristics and deliverability of the Zamzama field.

BHP will lay a 12-kilometre pipeline from Zamzama field to SSGC's 'Indus right bank pipeline system' (IRBP) to deliver 60 to 70 MMCFD gas for onward transmission to Karachi. This will increase gas availability at the Karachi load centre where major consumers like KESC, FFC-Jordan, and Pak Steel etc are located.

The additional gas, will be available from April 2001 and will replace approximately 1400 metric tonnes per day of furnace oil used in the power and industrial sector.

The term of the GSA is 21 months and during the period furnace oil of the value of about 120 million dollars (at $135/tonne price) will be replaced.ÑAPP