Installation of compressors at Qadirpur gas field: OGDC's failure may cost SNGPL Rs 340 million

The failure of Oil and Gas Development Company Limited (OGDC) to install compressors at Qadirpur gas field may place a hefty Rs 340 million financial burden on Sui Northern Gas Pipeline (SNGPL).
As per earlier schedule, the compressors at gas field were to be installed in September 2009. But due to litigation with China Petroleum, the work remained suspended. The Chinese company was awarded the compression project in 2006 after the bidding process was completed.
Documents show that OGDC administration had awarded a contract to Enar to carry out detailed engineering design, procurement, construction supervision and commission/start-up assistance while SNGPL was to be the construction contractor. Sources allege that both companies had been awarded contracts without following due process as far as bidding and tender documents were concerned. According to the documents, Enar had informed OGDC and Petroleum Ministry authorities that Public Procurement Regulatory Authority (PPRA) Rules did not apply to this project.
Sources said that SNGPL compressors at Bhong were designed to boost gas pressure. "To examine restaging of compressors to enable operating at 550 psig pressure SNGPL administration had approached the supplier of the compressors who provided a quotation of Rs 340 million, and supply in four months, after placement of the order". The SNGPL would then take four months for restaging/commissioning after the receipt of the material.
"The time required for restaging of compressors at Bhong is identical to ODGC's compression project, and SNGPL would have to revert to current configuration to take gas at contractual pressure of 750 psig," sources said, adding that SNGPL will have to spend Rs 340 million on restaging of compressors due to delay of installation of compressors at Qadirpur gas field.
Out of 14 interim compressors, 4 would arrive on the site on January 8, 2010 while remaining 10 compressors would be shipped by mid-December to arrive on site in early February 2010. Though OGDC officials say they are confident to complete the Compression Project at Qadirpur gas field by June 2010, SNGPL management has expressed concern based on the fact that procurement of necessary material alone would take 6-8 months since these items are not available off the shelf but have to be tailor-made. Sources said that SNGPL management is wary of OGDC's target date of June 2010 as the completion date for the commission of the project.
Gas supply from Qadirpur gas field is steadily declining due to delay in the installation of compressors which is affecting gas availability of the SNGPL system, particularly in the winter season. Petroleum Ministry officials maintain that despite recommendations of three studies, OGDC management did not ensure commission of the project on time. "This situation may lead to zero gas from Qadirpur gas field by June 2010 if the compression project is not completed," sources added.