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Aminuddin says gas price deal in weeks

ISLAMABAD: Pakistan is close to signing gas-pricing agreements with foreign oil companies that could open the way for a billion dollars worth of investment, a government minister said.

"We are at a stage where we have married our thinking...it is not a process that is going to take months. Hopefully, a few weeks," Usman Aminuddin, Minister for Petroleum and Natural Resources, told Reuters late on Thursday.

Industry executives say price deals on natural gas discovered in Pakistan since 1997 were crucial to attracting up to a billion dollars in investment over the next two to three years.

Industry sources said the negotiations between the government and producers were on a revised pricing formula which sets oil price bands for gas prices, previously linked to prevailing international crude oil prices.

Up to nine trillion cubic feet of gas has been discovered in seven fields in Pakistan and development of the fields with a distribution infrastructure has been forecast to cost $1 billion.

British firm Lasmo Plc's gas discovery of one trillion cubic feet in the Bhit field in the southern Sindh province will need $350 million for development.

Joe Darby, Lasmo's chief executive, said last week the company was "close" to signing the agreement and would initially invest about $250 million.

Aminuddin said Pakistan had signed similar agreements with other gas producers and talks were in an advanced stage with several other companies.

"We are negotiating the gas price agreements not only with Lasmo, but other producers and hopefully these negotiations should be completed soon," Aminuddin said.

Industry analysts say if the agreements are reached, it would help improve the investment image of Pakistan, tarnished by a row with independent power producers on tariffs and by delays in settling on a gas price with the oil companies.

Pakistan produces two billion cubic feet of gas per day, and by 2002 up to 900 million cubic feet could be added after the newly discovered gas comes on stream.

Aminuddin said Pakistan was also "actively" looking at various regional gas pipeline projects, including one from Iran to India through Pakistan which had the potential of generating at least $600 million a year in transit fees for Pakistan.

There have been talks on the project since 1995.-Reuters