The board of directors of the Oil and Gas Development Company Limited (OGDC) has approved a plan to develop Kunnar Pasakhi Deep-Tando Allah Yar oil and gas exploration project by utilising its own resources and have cancelled tender for a $450 million engineering, procurement and construction contract.
According to the minutes of a meeting held on June 23, the OGDC board resolved that all the bids received for setting up a plant and allied facilities for the Kunnar Pasakhi Deep-Tando Allah Yar integrated project were non-compliant. It rejected the bids and annulled the tendering process for the sake of transparency.
It decided that OGDC should implement the project itself in two phases. In the first phase, dehydrated gas will be supplied to Sui Southern Gas Company (bypassing Jamshoro Joint Venture Limited (JJVL) facilities) by October this year and in the second phase the remaining plant will be set up within 18 months. However, work on both phases will kick off simultaneously.
For gas supply to SSGC, OGDC will install two dehydration plants at Kunnar Pasakhi each having processing capacity of 50 million cubic feet per day (mmcfd) of natural gas. On its part, SSGC will lay a 35-kilometre pipeline to receive gas.
Petroleum Minister Dr Asim Hussain, talking to The Express Tribune, said OGDC would also install a liquefied petroleum gas (LPG) extraction plant, which was lying idle with a public sector exploration company. Secretary Petroleum Ijaz Chaudhry said the LPG plant would be set up within six months along with the dehydration plant.
Government officials said it would be a fast-track process to extract gas from the project to meet the requirements of the country which is experiencing a gas crisis even in the summer season.
Sources said the OGDC board, before reaching a decision, considered three options to implement the project. First option was to scrap the tender so that OGDC could implement the project in association with public sector companies like Enar and Sui Northern Gas Pipelines Limited (SNGPL).
Second option was to negotiate with the lowest bidder for the project. Two qualified bidders – Hyundai Engineering with Presson Descon International and Malaysia-based KNM – had submitted bids for $582 million and $647 million respectively.
OGDC has worked out a cost of $450 million through an internal study. However, some officials are of the view that the project can be implemented with $350 million.
Third option was to scrap the tender and install two dehydration plants to extract 100 mmcfd of natural gas.
The project, when implemented, is expected to produce 285 tons of natural gas per day, 387 tons of LPG, 400 barrels of Natural Gas Liquefied (NGL) and 4,500 barrels of crude oil.
Published in The Express Tribune, July 17th, 2011.