Petrosin enters into litigation with OGDCL

Singapore-based firm battles over projects worth $500m.

ISLAMABAD:

Singapore-based Pakistani firm, Petrosin has entered into litigation with Oil and Gas Development Company Limited (OGDCL) for an over $500 million engineering, procurement and construction (EPC) contract for Kunner Pasakhi Deep and Tando Allah Yar (KPD&TAY) integrated development projects.

Earlier, Petrosin had moved a court against OGDCL over scrapping the tender of Uch-2 development project, a previous partnership project between the two, after Pestosin’s partners had backed out of the joint venture agreement.

Sources told The Express Tribune that OGDCL had opened the financial bids of KPD&TAY in which three parties PDIL, KNN and Petrosin had participated. Sources said that OGDCL had sought opinion from German consultants ILF on the issue of Petrosin, whose partners had annulled joint venture agreements.

“IFL had argued that legal opinion should be sought relating to the matter of Petrosin,” sources said.

Sources maintained that OGDCL had opened financial bids on KPD&TAY on May 25, 2011 and the lower court had maintained status-co position from May 26 to 27. KNN has submitted bid of $647 million whereas the PDIL bid stands at $582 million.

OGDCL consultants would further evaluate the financial bids by seeking more queries from the bidders. Technical marks will also be added up to the marks of financial bids mark to award the contract, sources added.

In response to Petrosin’s petition filed in the lower court, OGDCL has argued that Petrosin had a dispute with partners and therefore OGDCL should not be engaged in this legal battle.

In 2008, OGDCL had combined Tando Allah Yar (TAY) project with Kunner Pasakhi Deep (KAP) but the tender was scrapped leading to litigation thereby depriving the country of much needed gas.

The KPD project was expected to produce 250 million cubic feet per day (mmcfd) of natural gas and 286 metric tons Liquefied Petroleum Gas per day. OGDCL had received three bids for KPD from three parties - Petrosin, PDIL and KNN following a formula to award the contract based on 30 per cent marks for price bid and 70 per cent for technical proposal.

After the controversies generated on Uch-2 due to submission of revised bid bond by one party, the work on evaluation process of bids for KPD project was put on hold till the resolution of controversies. PPP MNA Ayatullah Durrani has also filed a petition on over $186 million EPC contract for Uch-2 development project.

When contacted, an OGDCL spokesman confirmed “yes we have received a stay order from the Islamabad High Court directing us not to award the Uch-2 EPC contract and OGDCL has been directed to submitted comments by May 29, 2011”.

The spokesman said that 16 cases against OGDCL in various courts were filed in the past and most of these cases were subsequently decided in favour of OGDCL at the Supreme Court level. 1

Published in The Express Tribune, May 28^th, 2011.