The Oil and Gas Development Company Limited (OGDC) has scrapped the tender for sale of hydrocarbon resources at wellhead Jakhro condensate gas field, reportedly under pressure from certain LPG lobbies, and bids opening scheduled for Friday has been cancelled.
In a letter sent to prospective bidders, a copy of which is available with Business Recorder, the OGDC stated "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 said that the Board of Directors (BoD) of OGDC had revised the formula for sale of hydrocarbon resources at Jakhro gas field after unearthing an alleged conspiracy involving OGDC management with the objective of selling natural gas as well as LPG and condensate elements.
"Had the conspiracy succeeded, OGDC would have faced millions of rupees loss as it would have allowed LPG and condensate elements free of cost along with natural gas from Jakhro gas field," sources said. The OGDC has estimated that the field has LPG production capacity of 21 million tons per day. "OGDC will be facing net loss of around Rs 21 million on account of signature bonus," sources added.
"The BoD decided that OGDC will be owner of LPG and condensates elements, whereas natural gas will be sold to prospective parties," sources said, adding that after this decision certain LPG groups had not submitted bids. Sources said that the OGDC had declared Jakhro field as dormant, and had advertised bids on July 11, 2010 for the first time. OGDC management advertised extension on August 28, 2010, after revision in wellhead gas sale formula, and extended the date for opening of bids to September 30, 2010, which has been cancelled.
According to sources, the OGDC had invited parties for sale of wellhead gas for power generation purposes because gas utilities had expressed inability to receive gas as it had low pressure. OGDC was also reluctant to set up LPG extraction facilities on the field on the pretext of higher cost of LPG plants.