Business

Favouring local investors: PPL likely to be sold in bits and pieces

Company decides to divide its oil and gas reserves into small assets

Zafar Bhutta November 14, 2015

There were security concerns and issues with the Balochistan government in relation to the Sui field, therefore, the government would first sell the Adhi field, followed by Kandhkot, Gambat South and non-operated joint ventures. PHOTO: FILE

ISLAMABAD:

The top management of Pakistan Petroleum Limited (PPL) has decided to divide the company’s production and reserves into smaller assets, in an apparent bid to sell the state-owned firm in bits and pieces to favourites instead of searching for multinationals.

According to officials aware of the development, the new managing director of PPL has decided to undertake asset management activities, which means that the company’s production and reserves will be split into smaller assets such as Sui, Kandhkot, Adhi and Gambat fields.

In the past, efforts were also made to sell PPL to local investors to allegedly serve the vested interests of people sitting in the power corridors during the governments of Benazir Bhutto, Asif Zardari and Nawaz Sharif. However, no deal could be struck.

Corporate results: PPL’s profit plunges 57% amid declining oil prices

“The biggest hurdle is the size and asset strength of the company and only a multinational exploration and production firm can buy it,” an official said.

The present government was trying to find a way to sell the company in bits and pieces to its favourites, he said.

PPL is worth over $2 billion in terms of oil and gas reserves, in addition to assets on the surface. The company is the owner and operator of working interest in about 30 oil and gas fields including the prized Sui, Kandhkot and Adhi fields. It has about 50 exploration blocks that are spread across the country.

PPL was recently included in the privatisation list after a gap of nine years and new Managing Director Syed Wamiq Abrar Bokhari has started taking decisions that could lead to its sale to local investors.

PPL looks to shore up depleting reserves

According to the official, the MD decided that there were security concerns and issues with the Balochistan government in relation to the Sui field, therefore, the government would first sell the Adhi field, followed by Kandhkot, Gambat South and non-operated joint ventures. This way, PPL’s operations will be limited to the Sui field.

He decided to pay gratuity to the staff and undertake steps to abolish the gratuity scheme. Attempts were also being made to end the pension scheme.

The company this year gave only 3% annual pay rise whereas the government announced a 7% increment. Now, it is actively working on doing away with the medical facility schemes. As a result, liabilities of the company will fall significantly and investors would have to clear no liabilities after privatisation.

The head office of the company is being shifted to Islamabad and in the beginning two assets have been moved. Its purpose is to reduce the staff strength and streamline things for the prospective buyer.

Oil and gas: PPL hits another discovery in Hala block

Not only in PPL, the Ministry of Petroleum and Natural Resources appointed managing directors in all other state-owned oil and gas companies in order to comply with the Supreme Court order.

However, contrary to the newspaper advertisements given for other companies, the maximum age limit in PPL’s case was set at 55 years with flexibility up to 57 years if the applicant had extraordinary credentials. This, the official said, was aimed at keeping Asim M Khan and Khalid Rahman (former managing directors of PPL) and other experienced candidates from applying for the post.

For other companies, qualified professionals with requisite experience, even above 60 years of age, could apply for the slot.

Published in The Express Tribune, November 15^th, 2015.

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COMMENTS (17)

Turth | 8 years ago | Reply @ Raza Somorro Answer: Do you know how many people from Karachi are working in OGDCL and in other state owned companies? Less than 1%. You may also appreciate that Karachi contributes 65% of Pakistan's revenue. Furthermore, Karachi is a metropolitan city with no ethnic denomination over powering and instead has representation from all over Pakistan. STOP QUOTA BASED THINKING IF YOU HAVE GUTS COME TO MERIT POOL. @ Sarfaraz Go with abcd STOP QUOTA BASED THINKING IF YOU HAVE GUTS COME TO MERIT POOL.

Najib | 8 years ago | Reply Moin Raza Khan, DMD, PPL is a known corporate criminal. He should be sent to the gallows.

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Speak with logic | 8 years ago | Reply Kindly be apprised that sui contributes only30% of the revenue, have u guys ever looked at ogdcl, it has almost 20,000 workforce and double the size of ppl, here in ppl there are roughly 3,000 employees...... Do the arithmetic!

Retiree | 8 years ago | Reply As an ex employee of PPL, it breaks my heart to know that this great company consisting of engineers from all related fields, would one day break up into pieces.....such a congregation of expertise gone to waste....my blessings are for PPL

Najam | 8 years ago | Reply Privatisation of PPL is the only realistic strategy for PPL, as well as Ministry of Petroleum to pursue. Sui gas field is depleting at an alarming rate, contributing well over 50% to PPL revenues. No such major discovery has been made to date, by either of the heavy-weight state-owned oil & gas companies. Projections by both local and international oil & gas experts point to the fact that Sui gas field will no longer be commercially viable to produce from in about 3 years time, as gas flow-pressure is receding faster than expected. Even if artificial methods, such as Enhance Oil/Gas Recovery (EOR) tehcniques are applied to uplift natural gas-pressure from the reservoir, then even, Sui's overall gas reserves have unfortunately reached the so-called, " Tail-end Phase of Life Cycle ". Hence, the workforce would have to be reduced / slashed proportional to falling revenues i.e. HALF of the 3,000 plus employees, since revenues are anticipated to dwindle by almost half, as well, corresponding to Sui's gas production volumes.

Saima | 8 years ago | Reply No foreign upstream oil & gas company will acquire PPL, owing to 1) over employment and 2) uncertain security situation in Karachi. However, should head-office be moved to Islamabad, then the matter could seriously be considered by International Oil Companies.

Omer | 8 years ago | Reply @Sarfraz: so karachi is not in Sindh?? really this is how we go when Karachites get jobs and otherwise no province. Good Going

Dennis | 8 years ago | Reply Sui Gas filed is depleting at an alarming rate, which is a known fact. That's PPL's bread and butter. According to PIP Sui won't be commercially viable in about 3 to 4 years, since natural gas flow pressure is eroding by day at dangerous levels.... Even if artificial methods, meant to augment gas pressure are applied, it cannot make make Sui financially viable, as Sui has now reached its " Tail End Phase of Life Cycle", as the geologists say. It's a dying field soon not to be financially beneficial to GoP ! ! Point is, and as someone above has also mentioned that Sui Filed contributes approximately 50 to 55 percent of PPL's revenues. If in 3 years time, the filed is no more commercially / financially viable, then the bottom-line would also be impacted proportionately. Hence: almost half of the roughly 3,000 workforce will have to be trimmed (reduced) by half - or even more. So the process should kick start now and start preparing employees of the stark realities that line ahead. My advise is - This is a golden time to find work somewhere else. Act now, don't wait for the last moment !

abcd | 8 years ago | Reply @Sarfraz: Karachi is located in Sindh sir....Even when you went to ARAMCO Karachi was part of Sind and it still is and will remain part of Sind. Why should there be equal representation of any province in any organization? Why can't we have organizations running on merit? Does ARAMCO run on equal representation from all provinces or does it run on merit? Take off your tainted glasses and wear a Pakistani Badge sir. Long live Pakistan!! Long live Pakistanis!!!

abcd | 8 years ago | Reply @Sidra: How is it in the "best national interest" to have it move to islamabad?

Concerned Pakistani | 8 years ago | Reply For the people who are spreading hate: Never ever spread a word without full authenticity. The SECP order which you are referring to has been withdrawn.

Asim M Khan | 8 years ago | Reply Sui field comprising 60 % of PPL's revenues will completely dry out in roughly 5 to 6 years time. This means massive redundancies at PPL is inevitable !

Sarfraz | 8 years ago | Reply Their should be equal representation of all provinces at PPL. I worked there till 2013 now with ARAMCO in Saudi. Sadly 90 percent of the staff especially management staff are ethnically from Karachi. While 100 percent of gas and oil is located in Sindh, Baluchistan and KPK.

Sidra | 8 years ago | Reply Great decision to move to Islamabad ! In the best of national interest for sure sure.

Haider Ali | 8 years ago | Reply Dear Readers, it must be noted that this is not a time to sell but a time to buy the assets at very cheap price. The govt will not be able to get a competitive buyer who can give the real value of PPL

Raza Soomro | 8 years ago | Reply Government should privatize PPL, either to local or foreign investor (s). And should get rid of the excessive baggage piled up over the past 40 some years. For one job, they have four employees hired. Surprising for me is the fact that all their core assets - gas and crude, are located either in Sindh, Baluchistan or KPK, but over 90% of the staff is from Karachi. And, almost all of the Senior Management personnel are ethnically from Karachi or Hyderabad. That is totally unacceptable. Should be the reverse.

manzoor | 8 years ago | Reply why should it be a problem for you if the locals are encouraged to shoulder the responsibility of economic development of the country.

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