Gas from new discoveries: Petroleum ministry turns down power ministry’s plea

Says it will provide gas from other sources for utilities to make up for the shortfall.

ISLAMABAD:

As gas production from existing fields drops by about 10%, the Ministry of Petroleum and Natural Resources has refused to allocate gas from new discoveries to power companies, a move that will most likely have an adverse effect on the power crisis in the country, sources say.

The snub from the petroleum ministry came after the water and power ministry asked the Economic Coordination Committee (ECC) in a meeting to provide gas from new discoveries to power plants located in Punjab, which has borne the brunt of electricity shortages.

Earlier, some new gas had been supplied to a power plant in Punjab, but the petroleum ministry has dismissed calls for more allocation.

The power ministry alleges that gas supply to power companies is being continuously curtailed, forcing even the most efficient gas-based independent power plants (IPPs) to switch to high-speed diesel (HSD).

The ministry also argues that the petroleum ministry has dedicated gas from new sources to fertiliser plants, but is reluctant to provide gas for power companies.



At present, four efficient IPPs in Punjab with a generation capacity of more than 800 megawatts have no gas and they are either running on expensive diesel or have suspended operations.

Power production from gas costs around Rs4.50 per unit, but the cost of diesel-based plants is Rs19 per unit.

According to an official of the water and power ministry, total gas production from the new discoveries in Balochistan and Sindh is estimated to be 82 million cubic feet per day (mmcfd). Jhal Magsi south field in Balochistan is expected to produce 15 mmcfd and Tando Allahyar and Dar fields in Sindh are likely to give an output of 67 mmcfd.

Of the new gas finds, 20 mmcfd of gas has earlier been given to a 100MW power plant at the Nooriabad Industrial Estate.

The official said the petroleum ministry projected a decline of 5-10% in gas production from existing fields and as a result gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – would need 150 to 300 mmcfd to maintain the existing flow.

The official quoted the petroleum ministry as saying that after allocating 20 mmcfd to the Nooriabad power plant, the remaining 62 mmcfd would be injected into the system to meet annual replenishment requirement. “Therefore, no gas is available for any entity,” the petroleum ministry said in its response.

The 62 mmcfd of gas had been equally distributed between SSGC and SNGPL, which would enable them to make up for the shortfall and maintain overall gas supply to all sectors including power companies, the petroleum ministry said.

Published in The Express Tribune, December 22^nd, 2012.