Ogra may raise gas wellhead prices

RECORDER REPORT

KARACHI: The Oil and Gas Regulatory Authority (Ogra) is likely to revise wellhead gas prices by up to 9 percent, for the second half of FY12, on the back of 10 percent increase in both Arab light crude oil and high sulphur furnace oil (HSFO) prices during June-November 2011, analysts said.

During this period, the rupee has also depreciated by 3 percent against dollar, which would further enhance gas pricing for the E&Ps in rupee terms, they said.

Ogra revises wellhead gas prices for E&Ps every January and July, based on the average Arab light crude oil and HSFO prices during the first six months of the preceding seven month period.

The Arab light crude oil prices averaged at $107/bbl in July-November 2011, against $97/bbl in the previous six months, resulting in an increase of 10 percent on half-year basis. Similarly, average HSFO prices are up by 10 percent on HoH to $650/ton.

During the period under review, the rupee depreciated by 3 percent against dollar. This is likely to further 'improve' the gas pricing for the local E&P companies owing to dollar denominated revenues.

"We expect PPL to gain the most from the likely upward revision in wellhead gas prices", Atif Zafar, an analyst at JS Global Capital, said.

The pricing for Sui and Kandhkot fields are likely to be raised by 9 percent, which contribute 75 percent to PPL's overall gas production. Also, the pricing for Sawan field is likely to be increased by 6 percent, he added.

Pricing for other key fields, like Pariwali, Pindori, Turkwal and  Miano (governed under the Petroleum Policy 1997) are likely to register a growth of 6 percent. However, fields falling under the policy of 2001 (Manzalai and Mela) will not be subject to revision due to their wellhead gas prices being capped at an oil price of $36/bbl.