Government raises gas price by 50% for Sui field

Is operated by PPL, Balochistan sought 100% increase

ISLAMABAD: The federal government has agreed to raise gas price for the Sui field, operated by the Pakistan Petroleum Limited (PPL), after a demand was put forward by Balochistan to increase the rate based on the Petroleum Policy 2012.

While the Balochistan government wanted a 100% increase, the centre has agreed to increase the gas price by 50%, saying that prices of fuel had gone down massively in the last year.



The demand was made in a meeting held on November 11.

“All we can do is give 50% [increase] of the 2012 policy price to the producer to ensure maximum extraction of remaining reserves, besides providing an opportunity to the operator to drill deeper horizons,” the director general of petroleum concession (DGPC) said. “At 50% discount, Sui can produce in an economical way for about 10 years.”

The Balochistan government reiterated its agreement of continuation of PPL as operator of Sui field and use of policy 2012 and Rules 2013 as the basis for discussion. However, with regard to the fixation of 50% price of policy 2012 for Sui, the province also wanted to see the actual impact of 10, 30 and 50% discounts before agreeing on any number.

The DGPC highlighted that the 2012 policy price is provided to new exploratory efforts which is a high risk venture. “Since Sui field is a discovered field, the application of 100% of the policy price was not justified.”



It was also informed during the meeting that LPG extraction from Sui field was not technically feasible due to low content of propane and butane. Commonly, LPG extraction is considered if these contents are more than 2 mole per cent. The estimated flare gas was 1.45 mmcfd whereas 33 mmcfd acid gases were vented.

It was concluded that it was neither technically viable nor economical to extract LPG or use flare gas productively.

PPL operates 26 exploration blocks and has stakes and working interest in 17 other blocks. The energy secretary of Balochistan wanted to know details of the acquisition of shares in Sui/Burma Oil Company in the next meeting.

The centre has granted a one-year extension in the mining lease for Sui, which is in Balochistan and meeting needs of gas consumers for over six decades.



In a meeting on October 7, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, however, clarified that notwithstanding any provision of the constitution and its interpretation, the federal government wanted to take Balochistan into confidence while arriving at a final decision on extending the Sui mining lease.

He said the extension decision was taken on the last day prior to expiry of the lease and that too was only for one year in the larger national interest as an interim arrangement to avoid disruption in gas supply.

This interim arrangement will remain in place only until the resolution of outstanding issues,” he remarked. Balochistan wants constitutional rights of the province to be safeguarded and protected.

Published in The Express Tribune, December 29^th, 2015.

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