Ayesha gas field: SSGC, PEL agree to move forward

Gas utility had earlier pinned responsibility of laying pipeline to distribution network on the company

ISLAMABAD: The dispute between Pakistan Exploration Limited (PEL) and Sui Southern Gas Company (SSGC) over which entity would lay the pipeline from Ayesha gas field to Golarchi continued.

Based on the production profile of the gas field, which was around three to four years, SSGC believes that it would be economically unfeasible for it to lay the pipeline as it pinned the cost and responsibility on PEL.



However, in a meeting with government officials last month, advisor to PEL, Munir Ahmad, said that the company had two other discoveries in the same block - Aminah and Ayesha-north - and planned on delivering the entire production from the Ayesha gas field delivery point.

He then shared a combined production profile of the three gas fields that stipulated gas supply up to 20 mmcfd and the period of flow to be ten years. In response, SSGC stated that it looked apparently feasible and economically viable, but needed to be reviewed.

After detailed discussion, it was agreed that PEL shall soon submit to the government for approval a combined development plan.

The production profile approved by the government would be adopted for the purpose of Gas sale Purchase Agreement (GSPA) and evaluation of the feasibility of gas transport pipeline.

It was also agreed that DG Gas will initiate the process of allocation of this combined production from the three gas fields at an appropriate time. SSGC will review the feasibility at its earliest, based on the production profile provided by PEL and inform PEL to enable it to proceed further in the matter accordingly.

PEL is an operator of Badin-IV south block where natural gas has been recently discovered by the company at three places namely Ayesha-1, Ayesha North and Aminah fields.

During the meeting, SSGC informed PEL of its inability to negotiate the GSPA as one of the working interest owners, namely Frontier Holdings Limited (FHL), had informed the gas utility about its dispute and that the execution of any GSPA would be unlawful.



However, it was pointed out by a PEL representative due to a default on part of FHL, the company, proceeding in accordance with the provisions of the Petroleum Concession Agreement (PCA), forfeited FHL’s working with PEL. Consequently, PEL had submitted its request to the Directorate General of Petroleum Concessions (DGPC) for assignment of the forfeited working interest of FHL to PEL. Ghulam Munir, deputy director of DGPC, informed that a reference had been made to the Law Division and further action would be taken upon receipt of the Law Division’s advice.

It was pointed out by DG Gas that the matter between PEL and FHL was a dispute between partners and as per the provisions of PCA/Joint Operating Agreement, the government only deals with the operator appointed by joint venture. Therefore, the process of finalising the GSA should not be stopped. After some deliberations, it was agreed that SSGC and PEL should continue the discussion.

Published in The Express Tribune, August 9^th, 2016.

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