Kandhkot to third-party buyers: PPL seeks PD’s approval to redirect unutilised gas

ISLAMABAD: Pakistan Petroleum Limited (PPL) has requested the Petroleum Division’s approval to redirect unutilised gas from the Kandhkot Gas Field to third-party buyers out of 200 million cubic feet per day (mmcfd) assigned to Central Power Generation Company Ltd (GENCO-II) in Guddu.

The matter was discussed in the National Assembly’s Public Accounts Committee (PAC) while Junaid Akbar was in chair on Tuesday. Petroleum Division Secretary Momin Agha informed the committee members that a proposal to sell access gas to third party is the solution to address Genco-II dues against the company, province and federal government. It is also important as Genco-II privatisation is included in the active list of privatisation, he added.

The PD secretary said the low offtake and lower price of gas dedicated to Genco-II had negative impact on production of the gas field which would be completely shut down by year 2036 in case no fresh investment bring in it.

Low gas offtake by Genco-II: PPL seeks PD probe into reasons

He explained that the Genco-II was supplying gas at Rs550 per mmbtu tariff; still a significant variation has been seen in its off-take by the power company.

Imran Abbasy, managing director/chief executive officer PPL informed the committee that then investors from private sectors showed their interest in investment in the depleting well which would enable to enhance its production and life for year 2025.

He said that Genco-II off-take from the field was 100 to 110 mmcfd from the allocated 200 mmcfd. He said around 50 mmcfd gas was access or underutilised.

Chief Operating Officer Genco-II said that the power company was taking gas of 72.5 percent of total production of the field as per agreed Gas Sales Agreement (GSA) and reflected in fiscal year 2022-23 accounts. He said the company requested the PD to allow them to sell unutilised gas.

Access gas to third party would help Genco-II to clear its Rs70 billion dues under Gas Development Surcharge (GDS) to Sindh Province.

A substantial amount of PPL gas billing to Genco-II comprises government levies, mainly the GDS and Gas Infrastructure Development Cess, which are also payable to the government on collection from customers.

It has been reportedly said that PPL reported that gas off-takes by Genco-II are consistently lower than submitted Annual Contract Quantity (ACQs) of 145 mmcfd and daily average off-takes from KGF remained -98.7 mmcfd (July 1-Sept 2024).

Furthermore, since August 25, 2024, Genco-II reduced the off-takes below 75 mmcfd and there had been instances during said period where complete gas off-takes were ceased by Genco-II.

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