KARACHI, July 29: Oil and Gas Development Company Limited (OGDCL) stated that the production from Chanda would gradually be increased to 13-15 mmscfd of gas and 3000 bbls per day of oil and added that on completion of second phase of the project, OGDCL would subsequently produce 40 tons per day of LPG.

"The preliminary production from Chanda will result in a foreign exchange saving of around $30 million per year and will contribute significantly towards reducing the oil import bill of the country," the company said.

OGDCL is a publicly traded company at the stock exchanges. In November last year, the government had divested 5 per cent of its fully-owned equity in the company to raise Rs6.9 billion, by placing 215 million shares on offer.

The offer price of Rs32, turned out to be extremely attractive though only 98,000 of the 215,000 applicants for 1000 each who had been called up to apply, obliged. The OGDCL, one of the most liquid scrips on the KSE, was trading at around Rs66 on Thursday.

Mohammad Sohail, head of research at InvestCap commented that start of production from Chanda field was a positive for OGDCL. He calculated that the field would add a billion rupee per year to the company's profitability.

Every investor following the energy sector in the market had known fully well that OGDCL was feverishly working on the Chanda field. The start of production had, however, been officially done and declared now.

Passing on as a 'material information' under listing Regulation 28 of the KSE, OGDCL stated that production had started from July 17, 2004 from the Chanda field in district Kohat, which was the first ever discovery of hydrocarbons in the North West Frontier Province (NWFP).

Initially the company would produce 10 million cubic feet (mmscfd) of gas and 2000 barrels (bbls) of oil per day. "The gas will be transmitted to Sui Northern Gas Pipelines Limited (SNGPL) network at Daudkhel, whereas the oil will be transported to Attock Refinery Limited (ARL)," stated the OGDCL company Secretary, Basharat A. Mirza, in a detailed note on the new field as well as the overall operational profile of the company.

Chanda field, located at Shakardarra area in district Kohat of NWFP is a joint venture among OGDCL (72 per cent); Government Holdings (Pvt) Limited (17.5 per cent) and Zaver Petroleum (10.5 per cent).

The first Well Chanda-1 was drilled in 1999 and second in 2000. "Being the first ever discovery in NWFP, start of regular commercial production from chanda field marks an important milestone, which will generate revenues in the form of royalty and GST for NWFP from oil and gas production," the company said.

OGDCL observed that Kohat plateau was one of the most complex regions of the country. The company was also said to be working in the adjoining area and a well (Drabokas-1) was being drilled in district Kohat. Another well at Nashpa, was planned to be drilled before the end of the current year.

"Spurred by OGDCL's success other oil companies have shown interest in the area, which resulted in a gas discovery in Tal Block at Gurguri, district Kohat by MOL of Hungary," said OGDCL, and added that the company also had 30 per cent stake in that joint venture.

OGDCL holds the largest share of oil (47 per cent) and gas (35 per cent) of the total reserves in the country, the company stated and added that its percentage share of total oil & gas production in Pakistan was 34 per cent and 28 per cent, respectively.