ISLAMABAD, May 1: The government has empowered the Ministry of Petroleum and Natural Resources to amend existing petroleum exploration agreements with local as well as foreign companies in line with the international standards.

A decision to this effect was taken at a recent meeting of the Economic Coordination Committee (ECC) of the cabinet. It entailed that any supplemental agreements between operators of the two oil or gas fields would no more require approval from the ECC or the cabinet.

While this decision would apply to all the future contracts, the ECC also allowed the ministry to make arrangements of joint processing of gas from two different fields in Sindh that have been developed at a cost of around $350 million.

Documents provided to Dawn suggest that “though very common in the international petroleum industry, the arrangement of joint processing of gas from two different fields is unique and unprecedented for the local industry that requires certain amendments in respect of the petroleum concession agreements (PCAs)”.

In addition, a new agreement called joint management and utilization agreement (JUMA) has also been concluded between the joint ventures of two fields to ensure trouble free operations of Kadanwari plant.

Under the agreement, the Kadanwari gas processing plant would be upgraded and de-bottlenecked so that the plant can process additional gas from the Miano field.

The Tajjal block and Block-20 — located in Sukkur and Khairpur Sindh — are operated by joint ventures led by the Lasmo of UK and the OMV of Austria, respectively. The state-run Oil and Gas Development Company Limited (OGDCL) has working interests of 50 per cent and 52 per cent in Tajjal and Block-20, respectively.

A gas discovery in Tajjal block was made at Kadanwari in 1989 and brought on production in 1995 with capital investment of $200 million. In the meanwhile, another gas discovery was made in Block-20 in 1993.

Since both discoveries were located in close vicinity in which the OGDCL has majority working interest, the joint venture partners have agreed to develop synergy for processing gas from both the fields at Kadanwari processing plant that would be very economical when compared with separate plants.

The upgradation and de-bottlenecking of Kadanwari plan was financed by the Miano JV, enabling the Miano field to start production in January 2002. Now under the two agreements, one of the operators — Lasmo or OMV — is authorized to conduct the operations of Kadanwari gas processing plan for and on behalf of both the joint ventures on the principle that such operator will not gain or lose in doing such operations.

Both the joint ventures would share the cost of processing

on equitable basis linked to the throughput of respective fields.