Ogra revises wellhead gas prices up to 111pc for 47 fields

KARACHI: The Oil and Gas Regulatory Authority (OGRA) has increased wellhead gas prices up to a mammoth 111 percent for 47 fields with effect from July 1, 2017, a notification said.

On the basis of revised wellhead rates, the gas utilities including Sui Southern Gas (SSGC) and Sui Northern Gas (SNGP) would file requests for increase in consumer tariff that would come into force on December 31, 2017.

According to the notification, the highest 111 percent increase has been allowed to Sui field to $2.6597/mmbtu from Rs132.03 ($1.26)/mmbtu earlier. “This has been attributable to revision of Sui’s Gas Price Agreement (GPA) to 2012 petroleum policy to incentivise gas production,” Sharoon Ahmad at Elixir Securities said in a report issued on Wednesday.

Sui field is operated by Pakistan Petroleum Limited (PPL) with 100 percent post commerciality stake. Aftab Awan at Sherman Securities said as per notification, prices were effective retrospectively from June 1, 2015, “and according to our calculation, sum aggregating to Rs22 billion is due till FY17 translating into earnings impact of Rs7/share.”

The second highest jump of 23 percent has been allowed to Kandanwari gas field, another PPL asset. Its revised rates range from $7.2036/mmbtu to $6.0662/mmbtu as per the production ie higher the production lower the rates. The wellhead rates of Qadirpur gas field have been increased to Rs303.4 /mmbtu from Rs287.68/mmbtu, up by 5.5 percent.

Under gas sales and purchase agreements with different exploration and development companies, the payments to the majority producers are made by the government in foreign exchange while others are paid in Pakistani currency.

Among other notable fields, rates of Bhit were raised 6.7 percent to $3.2746/mmbtu while wellhead gas prices for Sawan and Miano have been raised 6.7 percent to $3.0488/mmbtu. The gas rates of Oil and Gas Development Company (OGDC) operated fields, including Kunnar Passaki Deep (KPD), Dhodak, Dakhni and Chanda were kept almost flat. Wellhead gas prices for KPD were set at $2.5401/mmbtuc compared with $2.5247/mmbtu notified in January 2017 announcement.

Gas rates for Dhodak were set at Rs308.80/mmbtuc from Rs308.57/mmbtu, Dakhni at Rs154.56/mmbtu from Rs154.44/mmbtu and Chanda at $2.7283/mmbtuc from $2.7150/mmbtu earlier.

The government-controlled natural gas pricing in Pakistan was significantly lower than the pricing of alternative fuels, leading to a situation where gas demand was very high, which compelled liquid natural gas (LNG) imports. According to former petroleum minister, Pakistan would be importing a cumulative of 3.0bcf of LNG/day by 2018 to bridge the demand supply gap, which has already crossed 4bcf mark.