ISLAMABAD, Aug 17: The Sindh government has withdrawn its claim over three small gas fields (technically defined as dormant) in exchange for supply of 20 million cubic feet (MMCFD) of gas for a 100-megawatt (MW) power plant in Nooriabad Industrial Estate, resolving a key dispute cropping up after adoption of the 18th Amendment of Constitution.

This has come as part of gas allocations from new fields — Jhal Magsi South (Kotra block) and Tando Allahyar and Dars Field — on the requests made by gas exploration and management companies.

“The government of Sindh has withdrawn its claim on gas allocated at wellhead of OGDCL’s dormant gas fields i.e. Nur & Bagla & Jakhro and has conveyed no objection,” said a senior official of the petroleum ministry.

The Jhal Magsi South Field (Kotra Block), in Balochistan, is a joint venture of Oil and Gas Development Company Ltd (56 per cent shares), Pakistan Oilfields Ltd (24pc shares) and Government Holdings Pvt Ltd (20pc shares). The gas field is expected to produce up to 15MMCFD for a period of 12 years.

The Tando Allahyar and Dars Field, in Sindh, is also a joint venture of OGDC (77.5pc shares) and Government Holdings Pvt Ltd (22.5pc shares). The gas field is expected to produce up to 67MMCFD gas.

Three small fields of Nur, Bagla and Jakhro can produce up to 30MMCFD of gas.

The ministry of petroleum and natural resources had proposed that gas from the two larger fields be shared equally by the Sui Southern and Sui Northern gas companies. And that out of the 50 per cent share of the SSGC, 20MMCFD of gas be allocated to the 100MW power plant in Nooriabad Industrial Estate on the request of Sindh government.

The ECC approved the allocation of 20MMCFD of gas to the Nooriabad power plant from the share of the SSGC. However, a final decision would be taken after consultation with different stakeholders, including those from the fertiliser and power sectors.

The state-run OGDC has been resisting the transfer of the ‘dormant’ gas fields to Sindh government or its designated entity, as sought by the provincial government in the aftermath of the 18th amendment.

The OGDC has been claiming that it has valid licences and legal rights over some of these fields. The ministry of petroleum had also requested the ECC and the prime minister to allow lease of dormant gas fields to the government of Sindh.

The ministry was of the view that OGDC should be paid petroleum concession agreement or policy price for gas and products like LPG and condensate, if produced, in accordance with the prevalent rules and regulations and subject to all applicable taxes.

On the insistence of some politicians of Sindh, another summary was moved for the ECC that sought to review its earlier decision under which the OGDC was to get the price of gas and the gas was to be utilised on the recommendations of the Sindh government in accordance with the transfer of rights and obligations to the provinces under the 18th amendment.

Sindh not just sought the control of the assets but also the gas sale proceeds, an arrangement that was unacceptable to the OGDC.

Interestingly, another summary was sent to the ECC seeking transfer of ownership rights along with the sale proceeds to Sindh despite opposition from the OGDC and requesting return on investment it had made on exploration and development of fields to the production stage.

In the first case, it was proposed that the lease of Jakhro gas field, which had reverted to the federal government, should be granted to the Sindh government or its entity. Jakhro Gas Condensate field located near Shahdadpur has an approximate daily capacity of 5.5MMCFD having heating value of 797 British Thermal Unit (BTU). Secondly, it was proposed that lease of Nur and Bagla gas fields, presently held by the OGDC, should also be given to the Sindh government or its entity soon after expiry of the OGDC lease in May 2011.

The Nur condensate field near Badin has daily production capacity of about 2.32MMCFD having heating value of about 1,018BTU and estimated reserves of 13.5BCF.

The Bagla condensate field near Badin has daily estimated production capacity of 5.28MMCFD, having heating value of 1074BTU. Both these fields were leased to the OGDC in 1995.

Thirdly, it was proposed that the lease of Sara West gas field, presently held by the OGDC till 2021, should be revoked under Petroleum (E&P) Rules and granted to the Sindh government or its legal entity.

The Sara West gas field near Ghotki has daily production capacity of 60MMCFD but produces gas of non-pipeline quality.

The provincial government has been calling upon the federal authorities to invoke rule 42(1) of the Pakistan Petroleum (E&P) Rules of 2001 under which the lease can be revoked if regular commercial production has not commenced within five years from the grant of lease and hand over the fields to it.

However, the provincial government surrendered its rights when promised that its power requirement for Nooriabad Industrial Estate will be taken care of.