BtB gas supply trade set to take off finally

ISLAMABAD: In a major development, the Board of Directors (BoD) of Sui Northern Gas Pipeline Limited (SNGPL) has approved the allocation of pipeline capacity on a firm basis equivalent to 13mmcfd to Universal Gas Distribution Company Limited (a first-ever local company that managed a gas distribution license to distribute the gas) for a period of 10 years paving the way for the beginning of first private to private business in the gas sector of the country under a third party (TPA) access rules, as a senior official of petroleum division told The News.

“Yes, we have accorded approval to the pipeline capacity for UGDC,” adding, “The Board of Sui Northern in its 605th meeting here on Monday accorded approval for the execution of the Access agreement with UGDCL along with the allocation capacity to UGDCL on a firm basis to an equivalent 13mmcfd for a period of 10 years starting from the date of execution of Access Agreement, subject to completion of all procedural/codal, legal financial prerequisites and strictly in accordance with the law.”

After approval of pipeline capacity by the SNGPL board, UGDCL – a private company will purchase gas from MOL, a Hungary-based private gas-producing company, and distribute it to the industries in Punjab (which are often denied the gas) through the SNGPL distribution network, official from ministry said. “Prime Minister Shehbaz Sharif is most likely to inaugurate the first private-to-private gas supply business in the country.”

Earlier, maintained, the Economic Coordination Committee (ECC) ratified the decision of the Petroleum Division on January 17, 2023, which paved the way for the deal.

Chairman of Energy Task Force and ex-prime minister Shahid Khaqan Abbasi, who played a pivotal role in materialising this BtB transaction of supplying gas to private consumers, including the industrial sector, declared it a success story while talking to The News.

UGDC CEO Ghiyas Abdullah Paracha, also confirmed the approval of pipeline capacity by SNGPL board and showed readiness to supply natural gas to some industries in Punjab on an immediate basis. He personally thanked Prime Minister of Pakistan Mian Shehbaz Sharif, Chairman Energy Task Force Shahid Khaqan Abbasi, the Secretary of Petroleum, and the state minister for ensuring the gas supply business under TPA rules.

He said UGDCL is the first private company in Pakistan that got a distribution license in 2017 and also inked an agreement for the supply of LNG with international companies such as ExxonMobil, Trafigura and QatarGas for LNG supply and now it has inked gas supply agreement with MOL from Tal block.

UGDC has already signed a Gas Sales and Purchase Agreement (GSPA) with MOL Pakistan Oil and Gas Company B.V. for supplying 14MMFCD gas initially from Mamikhel gas field, Tal Block, on a take-and-pay basis, with the supplier agreeing to increase gas supply in the future.

Confirming the BtB transaction to The News, the management said MOL has been actively engaged in Pakistan’s oil and gas sector since 1999 with its local joint venture partners OGDCL, PPL, GHPL, and POL and will more invest in exploration and production activities in the country after this very BtB gas supply deal.

The MOL and its joint ventures have so far invested $2.8 billion in the exploration and produced 23 percent oil, 9 percent gas, and 25 percent LPG, making its Tal JV block in KP the largest hydrocarbon-producing block in the country.

However, Paracha, CEO of UGDCL said that this initiative will ensure profit to SNGPL as its idle capacity in its network will be used and it will get the transposition tariff along with the actual UFG (unaccounted for gas. “It will also revive sick industries suffering due to a lack of gas supply. It will also reduce the country’s annual oil import bill by approximately $120 million.”