Sindh government and Oil and the Gas Development Company Limited (OGDCL) are at loggerhead with the former''s refusal to pay wellhead price as per the Petroleum Concession (PC) agreement for gas from four dormant gas fields in line with the decision of the Economic Co-ordination Committee (ECC), Business Recorder has learnt.
Sindh government and OGDCL authorities are currently negotiating Gas Sales Agreement (GSA) for the gas of dormant fields. OGDCL has already refused to hand over the fields to Sindh and called for paying wellhead price of hydrocarbon resources as per PC agreement in light of the decision of ECC. The case may be tabled before ECC again if OGDCL agrees to accept the Sindh government''s demand to pay a price lower than $ 4.02 per mmbtu as negotiated in PC agreement.
The OGDC in a meeting held in third week of last month informed Sindh Information Minister Shazia Mari and Finance Minister Murad Ali Shah that it would not make any investment to develop the dormant gas fields. 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) OGDC will be paid according to petroleum concession agreement, (ii) policy price for gas as well as products i.e. LPG and condensate would be applicable, (iii) product disposal by the buyer, would be in accordance with the prevalent rules and regulations; and (iv) all applicable taxes would be paid.
Subsequent to the ECC decision that clearly stated that gas from dormant fields would be allocated to Sindh, the Sindh government demanded that the fields be also handed over to it and directed OGDC to invest in developing these fields. OGDC authorities refused to accept these demands.
Sindh government wrote a letter to the federal government stating that it had the right to the fields after the 18th amendment. Consequently OGDC scrapped the tender with bid opening scheduled on September 30, 2010. OGDC board had approved the reference price to sell hydrocarbon resources in light of Gas Purchase Agreement (GPA) inked with other exploration companies.
In a letter sent to prospective bidders, MD OGDC Naeem Malik 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".
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