ISLAMABAD: A parliamentary penal on Friday expressed its serious concern over the delay and slow oil and gas exploration and production activities of state-owned leading company, the Oil and Gas Development Company (OGDCL) and other companies which resulted in import of expensive LNG and LPG for poor consumers.
Senate Standing Committee on Petroleum met under chairman Mohammad Abdul Qadir on Friday.
The committee expressed its concerns over the delay in starting drilling on wells in which concession agreements were signed 10 to 11 years ago due to security reasons.
Mohsin Aziz said no serious efforts to expedite exploration and production activities by the management of OGDCL have been seen on even those wells which were allocated nine to 10 years back.
He further said that the company blamed the law and order situation on the production sites and was not ready to take assistance from Balochistan lawmakers who assured eight years back to resolve the security issue of the company.
Another Member Saadia Abbasi remarked that the company was making a profit but exploration and production activities were slow.
Fida Muhammad asked the chair to provide details of all such wells allocated a decade ago but drilling and production have yet to start.
Responding to parliamentarians’ questions, Managing Director OGDCL Ahmed Hayat Lak said that the company had started working on a five years E&P activities plan for production of allocated blocks. The 2D/3D survey on various sites are different stages and security agencies and concerned government departments are working on the security of the employees of the company. He said permission from security agency for drilling of a number of wells has been pending.
He also asked parliamentarians to help address the security issue in drilling in Balochistan.
The Secretary of the Ministry for Energy (Petroleum Division), Mohsin Agha, said that the decline has been continuous for the last eight to 10 years, and they are looking forward to a comprehensive plan that would scrutinise policymaking. “Various working groups have been established on December 22, 2023, to help in developing a comprehensive policy to accelerate E&P activities andthe final draft would be ready by January 2, 2023…the OGDCL is a leading company of local exploration and production companies”, he added.
Additionally, the secretary of the Ministry for Energy (Petroleum Division) added that they are actively exploring indigenous sources and will address infrastructure constraints in their efforts to stabilise gas prices.
The committee members discussed the suspension of gas supply in industrial units in the province of Sindh for two days a week, causing a production loss of 28 percent, as well as a delay in the completion of the supply.
The Ministry for Energy (Petroleum Division) officials briefed that every year, more than 10 per cent of gas is depleted from reservoirs at different gas fields, while the demand for gas is increasing day by day. This year, SSGC (Sui Southern Gas Limited) is receiving around 90 MMCFD less gas compared to last year.
The committee members conducted a thorough analysis of supply statistics and gas depletion over the years. They recommended the Ministry for Energy officers (Petroleum Division) to address the discrepancies for conclusive results.
Furthermore, the officers from the ministry provided a briefing on LPG rates, explaining that the OGRA (Oil and Gas Regulatory Authority) determines LPG prices for producers, the margin of MCs (marketing companies), and consumers. The pricing is based on various parameters, including the producers' price per metric ton, which is determined monthly according to the Saudi Aramco Contract Price (40% Propane: 60% Butane). The distribution margin is fixed at Rs35,000 per metric ton, equivalent to Rs413 per cylinder. Additionally, there is a petroleum levy on indigenous production at Rs4,669 per metric ton, translating to Rs55 per cylinder. GST, previously at 17% and now increased to 18% since February 2023, applies to the aforementioned parameters. The officers also clarified that the compilation of these figures makes up consumer price.
The Chairman of OGRA, Masroor Khan, provided the committee members with a briefing on the reasons behind the increase in oil and gas prices. Senator Saadia Abbasi pointed out that the rise in cylinder prices is attributed to the taxes imposed on people. Similarly, the Chairman of the Committee, Mohammad Abdul Qadir, suggested that officers explore and utilise gas transportation via seaports and large ships to mitigate price increases, ultimately benefiting the larger population struggling with the rising costs. The chairman of OGRA stated that their FBR mechanism already operates at the sea border. However, currently, operating on large ships is not feasible, and efforts are underway to determine how to increase LPG operations at Karachi ports.
In conclusion, the Chairman of the Committee, Mohammad Abdul Qadir, recommended that officers from the Ministry of Energy (Petroleum Division) reach out to international companies and encourage them to invest. He noted that since 2015, the ministry has been purchasing LNG, limited to 2-3 bidders, despite numerous bidders worldwide. Allowing private entities could make the price more competitive. He also highlighted that several government and private companies are non-operative due to minor disputes, suggesting that the ministry should resolve petty matters to achieve positive collective results.
Copyright Business Recorder, 2023
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