Extraction of LPG/NGL (natural gas liquid) by JJVL started in 2005 mainly due to the presence of rich gas in Badin gas field owned by UEP that was producing more than 150 mmcfd volume. SSGC started processing it through a royalty arrangement under an implementation agreement with JJVL, which was declared null and void by the Supreme Court of Pakistan (SC) in 2013.
Later, SSGC and JJVL underwent another arrangement under MoUs for various gas fields, which continued till June 2018 when the SCP took suo moto action and declared termination of MoUs as valid. SSGC stopped the supply of gas to JJVL and the latter’s plant remained closed for six months.
Under the above two arrangements, ie Royalty and MoUs, SSGC was able to recover additional royalty amounting Rs4.25 billion and arrears of Rs1.5 billion SCP intervention. AF Ferguson & Co Chartered Accountants (AFFCO) was appointed as its deemed receivers, which consulted both SSGC and JJVL and devised a provisional mechanism of revenue sharing to be finalised at a later stage. An agreement was signed between the two parties and submitted before SCP for its approval and validation via the Honourable Court order dated December 29, 2018. The agreement period was for 18 months only that expired automatically when the term ended on June 20, 2020.
The decision to discontinue the agreement by SSGC was based on certain technical and commercial aspects. SSGC recently engaged the services of an international consultant to conduct studies on the way forward.
The consultant advised SSGC that current gas stream at Indus left bank pipeline system was lean, pipeline quality gas, which meant that it would not create any adverse effects on pipeline and its allied installations, if injected directly into the system. Last Monday, the Senate Standing Committee on Petroleum recommended SSGC to revisit its decision in the best national interest.
Published in The Express Tribune, August 13th, 2020.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ