Dormant gas fields: IHC moved

The on-going tussle between Sindh government and the Oil and Gas Development Company (OGDCL) over the control of dormant fields took a new turn when a shareholder of the OGDCL fearing a prospective deal challenged the matter in the Islamabad High Court.
A petitioner in a case filed in Islamabad High Court states that Sindh government has misinterpreted the 18th Amendment to secure the control of the four dormant fields. The petition which was filed two days back, came up for hearing in Islamabad High Court on Thursday.
Talking to Business Recorder, President Officers Association Saeed Malik confirmed that one shareholder of OGDCL had filed a petition in Islamabad High Court. "We believe that if Sindh succeeds in getting the dormant fields it may attempt to get other big fields like Qadirpur gas field," Malik said adding that 18th Amendment was being misinterpreted to deprive OGDCL of the fields. He averred that other provinces may also start claiming rights over the fields in their respective provinces if the dormant fields were handed over to Sindh. He further stated that provinces did not have any technical skills to operate the fields.
OGDCL had scrapped the tender for sale of hydrocarbon resources from dormant fields -- Nur, Bagla, Jakhro and Sara West -- after Sindh government claimed its rights under the 18th Amendment. The tender was scrapped in spite of the fact that OGCL issued a Letter of Intent to successful bidders who have since lodged a strong protest. Sources allege that a single bidder, engaged in LPG business and rental power plant, caused the scrapping of the tender.
Jakhro field has a potential of producing 21 metric tons of LPG per day and the Sindh government is demanding that it be granted Jakhro field's lease. In a letter sent to prospective bidders, OGDCL wrote: "Reference advertisement published in the national press on August 28, 2010 for Expression of Interest for sale of Hydrocarbon Resources at wellhead Jakhro condensate Gas Field has been cancelled till further order".
Sources maintained that Sindh and OGDCL were at loggerhead as the former had refused to pay wellhead price according to petroleum concession (PC) agreement for gas allocated from four dormant gas fields in line with the decision of Economic Co-ordination Committee (ECC).
Sindh government and OGDCL authorities are currently negotiating Gas Sales Agreement (GSA) for gas of dormant gas fields. Sindh government is insisting that OGDCL surrender the fields but OGDCL has refused and insists on Sindh paying the wellhead price for hydrocarbon resources as per PC agreement in light of the decision of ECC.
Sindh Information Minister Shazia Mari is negotiating GSA with OGDCL management. In recent negotiations, Sindh has refused to pay more than $1 per mmbtu wellhead price for Sara West field equal to what M/S P.I Holding (pvt) had offered in its bid in past that was cancelled after Sindh government claimed its rights on the field after 18th Amendment.
The ECC in its meeting held in last week of January 2011 had decided that the gas from Nur, Bagla, Jakhro and Sara West fields would be allocated to Sindh government, or its designated entity, subject to the conditions that: (i) OGDCL will be paid according to petroleum concession agreement, (ii) policy price for gas as well as products ie LPG and condensate be charged, (iii) product disposal by the buyer be in accordance with the prevalent rules and regulation, and (iv) all applicable taxes be paid.