Staff Report
ISLAMABAD:
Local gas producers will face a cut in revenue by 25percent as the Oil and Gas Regulatory Authority (OGRA) has advised Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited (SSGCL) to restrict payments of the producers to 75pc in case of absence of gas price notification.
OGRA, in a letter to the Managing Directors (MDs) of Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited (SSGCL), OGRA has advised that payment to producers of natural gas be made strictly based on well-head price notifications. In case provisional payment is justified. It may be restricted to 75% of the last notified price till such time the gas producers submit the requisite notification for the relevant period to the gas companies, said OGRA letter.
“It has however been observed that the payment, in respect of some gas producers, is made without prescribed document inter-alia wellhead price notification leaving a room for retroactive adjustment, which, in case of such eventuality, impacts the consumers resulting to economic distortion,” reads OGRA letter.
According to sources, this OGRA’s advice to the heads (MDs) of the two gas utilities (SNGPL &SSGCL) for restricting payments to the producers of natural gas might affect the sale of local cheap gas to the gas consumers and operations of oil and gas production companies as well. Similarly, the oil and gas producers might restrict gas production while they can also suspend the gas productions during the winter season. And, if the oil and gas producers restrict or suspend the gas supply during this winter season, then, domestic, commercial and industrial categories of gas consumers of the two gas companies will be affected badly.
“Secretary Petroleum should come forward and make efforts to resolve issues pertain to injection of local natural gas into the main gas system by the gas producers without price notification mainly to meet the burgeoning energy needs of the country,” said sources.
They added that in case otherwise, the entire gas system of the country will be affected if the issues pertain to injection of local gas into the gas system without price notification are not resolved.
Expressing their utter surprise, sources also said that OGRA has allegedly been creating hurdles in the use of $3/MMBTU price of local natural gas by local gas consumers while the government, on the other hand, has been assuring its support and cooperation to the commodity traders for import of an expansive approximately $15/MMBTU price of Liquefied Natural Gas (LNG) to the country. They said that efforts are allegedly underway to level the field for the use of expansive LNG and furnace oil to meet energy requirements of the country. They said foreign exchange reserve faces serious pressure due to the import of imported fuels to the country. They said LNG prices are sky high mainly due to gas shortage and owing to on-going winter season as well. The exploration and production (E&P) companies are being forced to quit their business to some extent owing to the poor attitudes of the official of petroleum division, directorate general of petroleum concession (DGPC) and OGRA, said the sources.
“Oil and gas producing companies of the country are already facing liquidity issues owing to circular debt and following the advice of OGRA to SNGPL & SSGCL, the gas producing companies are forced to either suspend their gas production operations or restrict gas production,” said sources.
It is pertinent to mention here that a cut of 25pc in the revenue/payments of oil and gas companies will also affect their exploration and production operations especially drilling of the oil and gas wells, seismic surveys etc.
