Increasing supply: UEP makes gas discovery in Mirpurkhas Khipro lease

Total production to increase to 400mmcfd in different phases, says SSGC MD.

KARACHI: The United Energy Pakistan (UEP), the most active petroleum exploration company in the country, has made a major gas discovery in the Mirpurkhas Khipro (MKK) lease, according to industry people and company’s financial statements.  

“Total production from the field will increase to 400 million cubic feet per day (mmcfd) in different phases,” said Shoaib Warsi, the managing director of Sui Southern Gas Company (SSGC) at a meeting with Karachi businessmen on Wednesday evening.

The field will start pumping an additional 150 mmcfd into the SSGC’s pipeline system by June 2015, helping ease the gas shortage, which has forced intermittent shutdowns of auto fuel stations and factories.

UEP, which is owned by Hong Kong-based United Energy Group (UEG), is already delivering 250 mmcfd from the Naimat and Kausar fields of the MKK lease, Warsi said.

The company is setting up two gas processing plants of a total of 160 mmcfd capacity, which will be operational in March and June 2015, UEG said in its 2014 interim report.

UEP was established in 2010, after its sponsor bought the Pakistani assets of British Petroleum for $775 million.

Since then, it has ramped up production to 40,227 barrels of oil equivalent per day (boed) by end June 2014.  During the same period, it netted a profit of around $110 million from Pakistan – almost the entire earning of UEG.

Its average production was 33,809boed in 2013.

The company also said that Pakistan government has revised gas price for its MKK fields to $5.5 per million British thermal unit (mmbtu) from previous $2.6 per mmbtu.

With 7 rigs, 14 exploration wells and 9 development wells in Badin and MKK areas, UEG says that it is the most active petroleum explorer in the country.

UEP is also targeting to export 1.8 million barrels of oil equivalent of condensate from Pakistan in 2014.

Gas supply curtailment

Speaking to businessmen, Warsi said that major gas fields in the country were depleting like Badin, which used to supply 110mmcfd till last year but now is down to just 55mmcd.

“But the good thing is that new fields continue to be found,” he said.

This does not mean that ramped-up production from domestic fields would be enough for bridging the supply-demand gap.

In next two to three months as winter season sets in, the SSGC would be cutting gas to some industrial consumers and CNG pumps, he said.

“Gas supply to all the Wapda power plants in Sindh would be discontinued. Similarly K-Electric, which is getting 210 mmcfd right now, will get only 100 mmcfd. We have also told Fauji Bin Qasim that we will curtail supply from January 1,” he said.

Pakistan faces a shortage of 2 billion cubic feet per day, with Punjab particularly exposed to its repercussions. The problem of fluctuation in gas pressure has also badly affected factories in SITE Association of Industry.

“Whenever the pressure drops, we have no option but to shut down the factory because the machines we imported are not designed for this kind of a situation,” said Zubair Motiwala, a senior member of the association.

Published in The Express Tribune, November 14^th, 2014.

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