The Oil and Gas Development Company (OGDC), the country’s largest explorer, has served a legal notice on Byco refinery for defaulting on payment of dues against crude oil supply.
“Byco is a defaulter that has not paid Rs5.5 billion for a long period,” a senior OGDC official told The Express Tribune.
Other refineries were also being asked to clear their dues, he said. “OGDC is facing a serious liquidity crunch due to circular debt as its receivables from the refineries and gas companies have swelled to Rs120 billion.”
In its defence, Byco (formerly Bosicor) says it has to receive payments from the Pakistan State Oil (PSO) that is why it has no money to clear OGDC dues. By July 30, PSO was to pay Rs2.59 billion to Byco on account of oil supply.
“We have asked the refineries to release their shares to OGDC against the dues which they have to pay,” the official said, adding the petroleum ministry was also being asked to intervene to resolve the circular debt issue as it could halt progress on ongoing projects.
New OGDC Managing Director Masood Siddiqui has given the company’s exploration and production department a target to drill 30 wells in a year. “We need money to achieve the target in order to increase oil and gas supply, which will help ease the energy crisis,” the official said.
OGDC, which is working on many oil and gas projects, requires financing of over $600 million to implement its business plan. It is a major loser in the circular debt saga as it is the only company that has not to make any major payment to any organisation, but has to receive billions.
“OGDC’s receivables on account of crude oil and natural gas supplies have risen to about Rs120 billion including late payment surcharge, which are stuck with the refineries and gas distribution companies,” a source said.
According to sources, the delay in executing energy development projects of national importance would have repercussions for overall economic conditions of the country.
OGDC is currently in the process of developing five oil and gas fields in an attempt to produce 400 million cubic feet of gas per day (mmcfd) and 500 tons of liquefied petroleum gas (LPG) per day. Around 8,000 to 9,000 barrels per day of crude oil will also be produced from these fields.
Of the five fields, work on Zin field in Balochistan has been delayed for the last two decades. The field has potential reserves of six to seven trillion cubic feet of gas.
From Uch-II field, OGDC is expected to produce 160 mmcfd of gas and from Kunner-Pesakhi and Tando Allahyar fields 280 mmcfd of gas and 350 tons of LPG per day after completion of these projects.
Published in The Express Tribune, August 9th, 2012.
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