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Gas purchase deals to be finalised soon

ASHRAF KHAN

KARACHI: The government is expected to finalise all of its gas purchase deals shortly paving the way for instant direct foreign investment, and thus fast track development of the newly-developed gasfields, it is learnt.

OMV of Austria, Lasmo of UK and Pakistan Petroleum Ltd (PPL) have been in final stages of signing over-delayed gas sales agreements (GSAs) with Sui Southern Gas Company, sources said on Wednesday.

SSGC is about to conclude agreements for purchasing gas from Sawan, Hasan and Bhit gasfields of OMV, PPL and Lasmo respectivley, they said.

After a successful discovery phase (1996 to 1998) foreign and local operators of these gasfields kept striving to get GSAs signed with the government, which was reluctant. Record increase in the international crude prices was the main reason for the govenment's hesitance since the gas prices are linked with the C&F Karachi crude oil prices according to the policy under which, these exploration agreements had been signed. The ice melted only a few months ago when the government devised an agreeable gas price formula for the gas producers.

Lately, the SSGC signed GPAs with the operators of Miano, Daru, Zamzama and Badin-II gasfields, under this modified gas price formula.

Besides stimulating significant direct foreign investment these deals will have other economic benefits, sources said. The injection of additional gas from these fields would substitues importred fuel oil with a domestic resource which also safeguards Pakistan's strategic interests.

It would also decrease foreign excahnge requirements, thereby easing pressure on balance of payments, in addition to increasing governmnet revenues, royalty, tax and return to the shareholders.

Gas experts are of the view that these fields have been capable of supplying additional 700-1000 million cubic feet of gas per day as early as 2002-2004. The potetinal gas production of these fields could improve the balance of payments by more than $500 million.