Controversies beset PPL as political will missing

Published: June 29, 2019


ISLAMABAD: State-run oil and gas explorer Pakistan Petroleum Limited (PPL) has been suffering from chaos and controversies for the past few years because of a lack of political will of past governments to put the house in order.

Pakistan made its first major gas discovery in 1952 in Sui area of Balochistan. Its reserves have played a major role in Pakistan’s economy for decades and have also proved to be the backbone of PPL – a subsidiary of Burmah Oil Company till 1997.

After Sui, PPL made a few more large discoveries and played a leading role for decades in meeting energy needs of the country. Till 2008, the company was considered a highly professional oil firm with impressive operating practices, said an official of the Petroleum Division.

However, things suddenly changed that year. From 2008 onwards for six years, PPL entered into a number of questionable ventures such as investment of more than $100 million in business ventures in war-stricken countries – Yemen and Iraq – in 2008 and 2009, the official told The Express Tribune.

In 2012, PPL purchased a small company MND Exploration and Production at a huge cost of $180 million. Its actual value, according to many experts, was in the range of $40 to $50 million.

In 2013, PPL issued a purchase order for a small liquefied petroleum gas (LPG) plant at $100 million against a single bid. A similar plant many times higher in production capacity was built in the country by another oil company in the same period at a cost of $200 million.

No oil, gas reserves found off Pakistan shore

The company made its first gas discovery in Gambat in 2011 but started production from the field much later at a negligible price with the help of a used plant installed at a cost of $6 million. However, Rehmat plant, many times larger, was later installed by PPL in 2017 at the same price.

The official shared that in addition to these, the Hala gas plant was outsourced to a third party with no justification in 2012. A plant was purchased in 2014 at a heavy price, which is currently lying idle. A compressor station was purchased for $10 million in 2012 but it was never used.

A purchase order for a gas plant was issued at a cost of $152 million in 2013, which was double the normal price.

Later, Wamiq Bokhari was appointed managing director of PPL in March 2015, who made efforts to reduce cost by more than 30% and increased hydrocarbon production by 10%. He focused on modern techniques and also accelerated the development of new fields with particular attention on Gambat, which could prove to be a game changer for PPL and Pakistan.

He issued two purchase orders for gas plants having capacity of processing 120 million cubic feet of gas per day (mmcfd) at half the price of what was paid earlier for a plant having processing capacity of 60 mmcfd.

Also, he kicked off an aggressive exploration and drilling campaign to find new oil and gas deposits. His efforts bore fruit as they resulted in a lot of discoveries.

PPL becomes Pakistan’s first company to drill well abroad

Nadeem Qureshi, a board member who was appointed chairman of the board audit committee, found that the company overpaid at least $100 million for the purchase of MND Exploration. After the finding, he was sacked from the board.

Even Farhan Sadiq, who served as a consultant to the audit committee on MND and who was later nominated by Prime Minister Imran Khan as PPL chairman, was stopped from taking charge of the company.

After the end of Bokhari’s tenure, Saeedullah, a board member, was appointed new MD but he had no experience of running a business. It worsened the situation, officials said.

When contacted, PPL spokesperson said Yemen at the time of PPL’s investment was a safe haven for exploration and production activity, with production of half a million barrels per day and good exploration prospects. Once peace returns, it will bring value, he said. About Iraq, the spokesperson said the Gulf country was literally floating on oil with success chance of 76% and excellent exploration potential. “Security is manageable there,” he said.

About purchasing MND Exploration at a higher price, he pointed out that the case was being investigated by the National Accountability Bureau (NAB).

Regarding Hala field which had been given on rent, the spokesperson said the processing plant was installed on build, operate and transfer (BOT) basis by Weatherford. It operated and maintained the plant for a few years and after open bidding its operation and maintenance contract was awarded to other contractor.

“Now, the company is operating it itself; every decision has a commercial reason,” he remarked.

About the gas processing facility (GPF-III) at Gambat south block, the spokesperson said it was something the company would not like to comment as the matter was sub judice and the vendor had not been able to complete even half the project after 40 months as against contractual obligation of 18 months.

Published in The Express Tribune, June 29th, 2019.

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