Qadirpur gasfield: installation of compressors may cost OGDCL $38 million more

The Oil and Gas Development Company Limited (OGDCL), which has been forced to install compressors as an interim arrangement due to the litigation with the Chinese company for the compression project at Qadirpur gasfield, is expected to cost an additional 38 million dollars, well placed sources told Business recorder on Saturday.
The contract for the interim arrangement was awarded to Houston-based Company, Valerus, which has shipped six compressors to Pakistan, scheduled to arrive at Qadirpur gasfield on December 30. "The OGDCL is to install 14 interim compressors for 18 months as alternative arrangements and remaining eight compressors are scheduled to arrive at the site in early February 2010," sources said, adding that the total cost of compressors was 20 million dollars and the ODGCL would have to pay around 18 million dollars on the installation of the compressors at Qadirpur gasfield.
The sources said the OGDCL management was confident that the compression project at Qadirpur gasfield would be completed by June 2010, but the SNGPL Managing Director was of the view that this is an optimistic completion date as the procurement of necessary material alone would take six to eight months as these items are not available off the shelf but have to be tailor-made.
The permanent compression project remains suspended due to litigation with China Petroleum, which was awarded the project in 2006 after bidding. This accounts for a steady decline in gas supply from Qadirpur gasfield, which, in turn, is affecting gas availability on the SNGPL system, particularly in winter season. When contacted, OGDCL spokesman Basharat Mirza conceded that some equipment, required to install compressors, would take time to get to the site.
"We will borrow equipment from other exploration companies like Pakistan Petroleum Limited (PPL), which is a common practice among exploration companies to ensure installation of compressors by the target date of June 2010," he said. According to the Petroleum Ministry officials, despite recommendations made by three studies, the OGDCL management had not ensured the commissioning of the project in time.
This may lead to zero gas supply from the Qadirpur gasfield by June 2010 unless the interim compressors are installed. The OGDCL administration has awarded a contract to ENAR to carry out detailed engineering design, procurement, construction, supervision and commission/start-up assistance, while the SNGPL will act as the construction contractor.
The sources said that both the companies had been awarded contracts without following the prescribed bidding process. According to documents, ENAR had informed OGDCL that the Pepra rules did not apply to the project. Delay in installation of compression project at Qadirpur gasfield may overburden SNGPL with Rs 340 million to restage compressors at Bhong.