OGDC under pressure to revoke Kunnar Pasakhi contract

Contract for developing phase-II was given to a Chinese firm.

KARACHI: Oil and Gas Development Company (OGDC) is under immense pressure to cancel a contract for development of the Kunnar Pasakhi Deep-Tando Allah Yar field (KPD-TAY), which was recently awarded to a Chinese company, a top company official told The Express Tribune.

The field, located 25 kilometres (km) from Hyderabad, has already faced repeated delays since work on it started in 2007, the official said.

“Some politicians have made our lives miserable. They are using everything in their power to delay the project,” said the high-ranking official who requested anonymity. “Everyone wants to make money. No one is thinking about benefits for the company or the country.”

The contract for the development of phase-II of KPD-TAY was awarded to Shandong Kerui Petroleum Equipment Company of China in March this year for $197 million.

OGDC is already producing 100 million cubic feet per day (mmcfd) of gas, 125 tons of liquefied petroleum gas (LPG) and 1,600 barrels per day (bpd) of oil from the field since February 2012.

After the second phase is complete, KPD-TAY’s output will jump to 225mmcfd of gas, 419 tons of LPG and 5,100bpd of oil.



On March 25, OGDC requested the finance ministry to allocate foreign exchange so that it could open up the letter of credit and start work. The approval is still awaited.

Secretary Petroleum Abid Saeed said no one approached the ministry with any information regarding pressure on the management. “We cannot do anything unless someone tells us about it.”

The petroleum ministry does not interfere in managerial affairs of the state-run companies which follow recommendations of their own boards of directors. “Our job is to ensure that all rules and regulations are being followed.”

In the case of KPD-TAY field there has not been any violations of the government rules, which could hamper the project. “At least I have not been informed about any violations.”

Naveed Vakil, analyst at AKD Securities, said importance of the field for OGDC can be gauged from the fact that it will enhance company’s oil output by 25% and gas production by about 215%.

“It is even more significant for the country, which has total gas production of around 4000mmcfd,” he said, emphasising that even little addition to the supplies matter.

Published in The Express Tribune, April 27^th, 2013.

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