Kunner-Pasakhi: Fate of energy project hangs in the balance

Study under progress to either scrap or revive oil and gas exploration project.

ISLAMABAD:

The government is expected to decide the fate of multi-million-dollar engineering, procurement and construction contract for Kunner-Pasakhi Deep and Tando Allahyar integrated energy project on Monday as the Islamabad High Court has already dismissed a petition filed by one of the bidders seeking a stay order.

Sources told The Express Tribune that three options were under study to either scrap or revive the oil and gas exploration project.

Petrosin had moved the court to get a stay order against the engineering contract after the Oil and Gas Development Company Limited (OGDCL) declared its bid as invalid because its partners had backed out of the consortium.

Of the three proposals under study, first says the tender for the engineering, procurement and construction contract should be scrapped, enabling OGDCL to take the project into its own hands and implement it in collaboration with other public-sector companies like Enar and Sui Northern Gas Pipelines Limited (SNGPL) in three years.

The OGDCL board has already cancelled a tender for developing another oil and gas field called Uch-II after partners of Petrosin decided to dissociate themselves from the consortium. This project will be implemented by OGDCL in association with state-run companies.

The second proposal says the OGDCL could negotiate with the lowest bidder for the Kunner-Pasakhi project. Two qualified bidders – Hyundai Engineering in partnership with Presson Descon International Limited (PDIL), and Malaysia-based KNM – have submitted bids for $582 million and $647 million respectively.

Sources said the OGDCL had worked out the cost of the project at around $450 million in an internal study and the company had the option to negotiate with the lowest bidder to bring down the cost. Public Procurement Regulatory Authority (PPRA) rules also allow negotiations with the lowest bidder after opening of bids.

Third option before the OGDCL is to scrap the tender and install two dehydration plants at the project site each having a capacity of processing 50 million cubic feet per day (mmcfd) of natural gas and were lying idle. This gas will be supplied to the Sui Southern Gas Company (SSGC), which will lay a 35km pipeline. Under this plan, the government will also utilise the Jamshoro Joint Venture Limited (JJVL) plant to extract liquefied petroleum gas and OGDCL will pay rent to JJVL.

Petroleum Secretary Ijaz Chaudhry, commenting on the project, said a decision on these proposals would be taken on Monday after the return of Petroleum Minister Dr Asim Hussain from abroad. “OGDCL is expected to implement the project itself,” he said.

The Kunner-Pasakhi Deep and Tando Allahyar integrated project is expected to produce 285 tons of natural gas per day, 387 tons of liquefied petroleum gas, 400 tons of liquefied natural gas and 4,500 barrels of crude oil. The two projects – Kunner-Pasakhi and Tando Allahyar – were merged by the OGDCL in 2008.





Published in The Express Tribune, June 12th, 2011.