ISLAMABAD, Aug 5: The Oil and Gas Regulatory Authority (Ogra) has increased wellhead gas prices up to an unprecedented 35 per cent for 12 production companies with effect from July 1, 2008 owing to rise in international crude and furnace oil rates over the last six months.

Ogra is currently in the process of upward revision in rates of remaining gas fields and would announce new rates over the next few weeks. All the revised wellhead rates would go up with retrospective effect from July 1, 2008.

An Ogra official conceded that increase in wellhead rates was unparalleled by all means but so has been the record jump in international oil market. He said Pakistan had no control over the international market and Ogra was bound by the pricing agreements the government had signed with the gas exploration and production companies to allow them higher rates.

On the basis of revised wellhead rates, the gas utilities –SSGCL and SNGPL – would file requests for increase in consumer tariff that would come into force on December 31, 2008. This will be in addition to the 31 per cent increase in consumer-end gas rates early last month.

An Ogra announcement said the highest 34.86 per cent increase has been allowed in the country’s largest gas producing Sui field from Rs107.47 per MMBTU (million British thermal unit) to Rs144.93 per MMBTU. This is because of a previous government’s decision to dismantle Sui field’s decade-old gas sales agreement with Pakistan Petroleum Limited to bring its rate at par with new gas fields, whose rates are directly linked with the international crude and furnace oil prices.

The second highest jump of 24.37 per cent was allowed to Kandanwari gas field, another PPL asset. Its rates have been raised from $9.4 to $11.7 per MMBTU. This is followed by 16.75 per cent increase in the wellhead rates of seven gas fields from $3.8 to $4.47 per MMBTU. These fields include Bhit, Sawan and Miano in Sindh, Pariwali, Pindori, Turkwal and Bhadra fields in the Punjab.

Likewise, an increase of 11.6 per cent has been allowed in the wellhead rates of Sara/Suri field, from Rs89.93 to Rs100.37 per MMBTU. The wellhead rates of Adhi gas fields have been increased from Rs91.15 to Rs101.35 per MMBTU, up by 11.2 per cent. The rates for Meyal/Dhulian gas field have gone up by 10.36 to Rs87.96 per litre from existing Rs79.70 per litre.

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.

The wellhead gas rates of all gas fields - except Sui - are directly linked to the international crude and furnace oil prices. At a certain level of international oil prices, the gas producers are required to share the windfall with Pakistan government. This adds to the profitability of the gas producers and higher revenues to the government.