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Wednesday April 17, 2024

152 mmcfd gas added to system under caretaker government

Now the government will allow E&P companies to sell 35 percent of gas to the private sector and 65 percent to public sector gas companies

By Khalid Mustafa
February 29, 2024
This image shows gas pressure meter. — AFP/File
This image shows gas pressure meter. — AFP/File

ISLAMABAD: The caretaker regime in its stint has added 152 mmcfd natural gas to the system, meaning that the government’s reliance on importing RLNG would reduce.

The addition of 152 mmcfd natural gas would also help save costly foreign exchange reserves of $42 million a month if given the prevalent cargo price of $28 million is kept in mind.

“More importantly, by the end of the current calendar year, 280 mmcfd natural gas will also be added to the system, helping the top functionaries to further reduce their reliance on imported gas. We dug 22 wells and made six discoveries,” a senior official of the Energy Ministry told The News.

“In the last eight years, Pakistan has imported gas (LNG) valued at $23 billion to cater to the energy needs of the country, meaning $3 billion (Rs900 billion) a year. The exploration and production companies, now after selling 35 percent gas to the private sector, will ensure reasonable liquidity for them for maximum exploration and production activities in the country.

“The country can increase its local gas production from 500 mmcfd to one bcfd in three years, which will help reduce the import of LNG and this is how the import bill will substantially plummet.”

He said that allowing the exploration and production companies under the caretaker regime to sell 35 percent of gas from the discoveries to private sector will improve the liquidity position of E&P companies, which will enable them to stimulate exploration and production activities in the country.

“The private sector will use the transmission and distribution system of Sui gas companies to sell gas to their clients, and this initiative will help reduce the liquidity crisis of the said E&P companies whose circular debt has increased to Rs1.273 trillion because of non-payment by Sui gas companies for decades. And due to non-payments, many international companies have left the country.”

Earlier, state-owned exploration and production companies were bound to give 90 percent of gas to Sui Southern and Sui Northern and 10 percent to the private sector. The 10 percent gas was negligible, which was why no reasonable private sector in the past had purchased the gas.

Now the government will allow E&P companies to sell 35 percent of gas to the private sector and 65 percent to public sector gas companies. The private sector may pay the E&P companies in advance, providing ample fiscal space and enabling them to improve the liquidity situation, which will pave the way for increasing exploration production activities in the country for more discoveries of oil and gas.