Private gas supply begins as SNGPL grants pipeline access to UGDC

ISLAMABAD: In a landmark development for Pakistan’s energy sector, Sui Northern Gas Pipelines Limited (SNGPL) after granting pipeline access to Universal Gas Distribution Company (UGDC), has enabled the country’s first private gas marketing firm to begin supplying natural gas to industrial clients starting 12:01am on Tuesday (October 14), reveals the notified decision issued by Sui Northern on Monday evening.

The decision by SNGPL board to grant pipeline capacity to UGDC, finalised on October 9 after prolonged delays, marks a critical step towards liberalising Pakistan’s traditionally state-controlled gas market. “Yes, UGDC is going to transport gas to its clients from the early hours of October 14, 2025,” confirmed Ghiyas Abdullah Paracha while speaking to this scribe. He said that with this decision, industrialists will be able to access gas as fuel at competitive rates, helping reduce input costs. Under the revised Access Agreement, UGDC has been allocated 50 million cubic feet per day (mmcfd) of capacity through SNGPL’s pipeline network—25 mmcfd on a firm basis until 2033, and an additional 10 mmcfd on an interruptible basis for six months. The company will source gas from the Razgir Gas Field in District Kohat, part of the TAL Block, operated by a consortium comprising MOL Pakistan, OGDCL, PPL, GHPL, and POL.

According to the decision taken by SNGPL on October 9, UGDC is bound to furnish a security deposit in line with contractual arrangements between the parties. Since UGDC’s pipeline capacity has been enhanced from 15 mmcfd to 50 mmcfd, the security deposit must be topped up accordingly.

Although the gas sourced by UGDC is considered among the most expensive in the country, the company aims to offer competitive rates by operating on minimal profit margins. It plans to target large industrial consumers, many of whom were previously dependent on SNGPL.

The approval ends over a year of resistance from SNGPL, which had delayed implementation despite earlier board approval. The Oil and Gas Regulatory Authority (Ogra) had already approved UGDC’s Gas Sale and Purchase Agreement (GSPA) in July, subject to several conditions—including the submission of unredacted pricing data and amendments to UGDC’s operating licence to include the Razgir Gas Field as an approved source.

According to official documents, the Petroleum Division clarified that UGDC’s gas allocation from the newly discovered Razgir field is not subject to the 2012 Exploration and Production Policy’s third-party bidding requirements. The Directorate General of Petroleum Concessions (DGPC) also confirmed that under the TAL Petroleum Concession Agreement (PCA), working interest owners are legally allowed to sell their share of gas directly to any buyer, without a competitive bidding process. This breakthrough paves the way for greater private sector participation in Pakistan’s gas industry. Industry experts say the move could inject much-needed competition and efficiency into the sector, though concerns remain over regulatory enforcement, pricing transparency, and the reliability of existing infrastructure.