Abandonment-suspension of well drilling: OGDCL faces Rs1.225bn loss

NAVEED BUTT

ISLAMABAD: Auditor General of Pakistan (AGP) said that Oil and Gas Development Company Limited (OGDCL) faced a loss of Rs 1.225 billion due to abandonment/suspension of drilling of a well.

According to Audit Report 2011-12 on Accounts of Public Sector Enterprises, Khawaja-1 well (Exploratory Well) was planned by OGDCL to be drilled in 430 days to the revised target depth of 5,500 metres in Gurgalot Joint Venture. The well was, however, drilled to 5,370 metres in 653 days. After attempting several sidetracks drilling, the work on the said well was suspended/abandoned, which resulted in wasteful expenditure of Rs 1.225 billion.

The report reveals that OGDCL Islamabad constituted an inquiry committee to probe the temporary suspension/abandonment of Khawaja-l well on May 04, 2010. In its report the inquiry committee concluded that the accused were never sincerely involved or supervised the drilling of the well. No proper supervision of the service companies (M/s Weatherford) was made. Manager Planning appeared to have no background of practical drilling experience. The committee recommended minor punishment of withholding/stoppage of one increment of GM (DO) and issuance of show cause notices to GM, JC (Exploration) and Manager (Drilling & Planning).

The inquiry report was defective as proper show cause notices and charge sheets were not issued before conducting of the enquiry, the report adds. This was a fact-finding inquiry and the committee was not authorised to recommend minor penalty against the loss of Rs 1.225 billion sustained by OGDCL. The management had not initiated any action against the accused for making good the loss.

The matter was also reported to the management on August 16, 2011 and the Ministry on December 02, 2011. The management in its replies dated September 12, 2011 and December 30, 2011 stated that Khawaja-1 well was suspended temporarily. The in-house processing of newly acquired 2D seismic data as well as re-processing of the old data was in progress. As soon as the processing was completed, re-entry through side track-4 would be made after a technical workshop with JV Partners.

The audit did not find the reply convincing as maximum time was wasted due to lack of co-ordination between Drilling and Exploration Departments. The jobs of the service companies were also not properly supervised. Due to miss-management several side-tracks drilling were done which wasted the drilling time and caused a huge loss of Rs 1.225 billion.

The DAC meeting held on January 12, 2012 discussed the matter in detail and directed the management to arrange special presentation to elucidate its point of view. Progress was awaited till the finalisation of this report.