Sindh seeks to take over dormant gas fields: OGDC fails to undertake development

In a major development, the Sindh government has urged the federal government to surrender dormant gas fields to the province because Oil and Gas Development Company Limited (OGDC) "has failed to undertake any development" on these fields within the stipulated timeframe, sources close to Finance Secretary Muhammad Siddique Memon told Business Recorder.
"We appreciate the decision of the federal government whereby dormant fields, namely Noor, Bagla, Sara West and Jalhro currently held by the OGDC would be transferred to Sindh government," sources said. OGDC has the following marginal and dormant fields: (i) Nur Condensate field located near Thatta/Badin whose approximate daily quantity of gas is 2.32 mmcfd @ 1018 btu with reserves(BCF) 13.40- lease was granted in February 1995; (ii) Bagla Gas Condensate field located near Thatta/Badin-approximate daily quantity of gas 5.28 mmcfd @ 1074 btu-lease February 1995; (iii) Sara West Gas field located near Ghotki-approximate daily quantity of gas is 60 mmcfd@120 btu-lease agreement June 2001; and (iv) Jakhro Gas Condensate field located near Shahdadpur- approximate daily quantity of gas is 5.50 mmcfd @ 797 btu.
According to sources, the provincial government intends to develop these fields in collaboration with private sector in a competitive process which would be undertaken in a transparent manner so that technically and financially competent entities are selected to participate in the development initiative. These fields have been held by OGDC for a number of years without undertaking any development and whereas the Rule 42(1) of the Pakistan Petroleum (Exploration and Production) Rules, 2001 clearly spells out that "the lease may be revoked if regular commercial production has not commenced within five years from the grant of a lease". As a consequence, Sindh government feels that these fields may be surrendered by OGDC and the federal government may re-grant these fields to the Government of Sindh, or its designated entity, under the applicable Petroleum (Exploration and Production) Rules.
It may be noted that to be able to attract private sector participation, it is imperative that these fields are re-granted for the full term prescribed under the applicable rules for the development and production leases. "To proceed further on this important matter, we look forward to any proposal of the Ministry of Petroleum and Natural Resources which leads to expeditious grant of these fields to the provincial government/designated entity," sources added.
An official in Islamabad said that these fields could not be developed due either to long distance from the gas distribution network, high pipeline or low btu content of the gas, making fields' development uneconomical. "Due to these impediments, OGDC explored the possibility of developing the stranded/dormant fields by seeking proposals/Expressions of Interest (EOIs) from prospective investors for sale of hydrocarbons at wellhead under the Gas Sale Agreement(GSA), for alternative utilisation of available hydrocarbon resources and exploring options for viable development of these fields," the official said.