ISLAMABAD, July 22: The government and a private petroleum firm Zaver Petroleum Limited (ZPL) are expected to reach by this weekend an out of court settlement on a dispute over $3.5 billion oil field in NWFP.

Official sources told Dawn that Petroleum Minister Usman Aminuddin had directed the Oil and Gas Development Company Limited (OGDCL) and the Directorate General of Petroleum Concessions (DGPC) to hold negotiations with the private petroleum firm for out of the court settlement.

This came on the intervention of ZPL chairman Sadruddin Hashwani, who approached the chief executive secretariat and the petroleum minister and then held a detailed meeting with secretary petroleum M. Abdullah Yousaf in the last couple of days.

These sources said that Mr Hashwani had directed the senior management of his petroleum company to stay away from the issue and would be negotiating personally with the petroleum secretary and senior heads of the OGDCL and DGPC by this weekend to finalize the deal.

Under the deal, broad parameters of which have already been agreed to, the ZPL would withdraw all the court cases and notices seeking replacement of the OGDCL as operator of Chanda Oil well near Kohat in NWFP. The company would also give an undertaking to abide by the joint venture agreement and not to cause delays to the project through court cases in future.

In return, the OGDCL would commit a time table for development of Chanda well in consultation with the ZPL.

The Lahore High Court Rawalpindi bench was currently hearing a case filed by the ZPL to change the OGDCL as operator of Chanda well and had maintained a status quo on the development of the project till resolution of the dispute.

The ZPL with an investment share of around $7 million was seeking to acquire the management of a $3.5 billion oil field from the OGDCL on the grounds that the OGDCL didn’t meet commitments required under the joint venture agreement.

The joint venture partners have so far invested a total of $60 million and the government has approved an investment work plan of another $60 million to start commercial production of the field by next year. A total of over $100 million equivalent investment share is that of the OGDCL.

The Shakardara field with estimated oil reserves of around 100 million barrels and gas reserves of around 15 million cubic feet is valued at $3.5 to $4.5 billion at the current international oil price at $25 per barrel.

The OGDCL with 85 per cent shareholding is operator of the field, followed by the ZPL with 10 per cent and five per cent shares are owned by the Government Holdings Limited (GHL), a holding company with 100 per cent government holdings.

Chanda-I was discovered in early 1990s while discovery of Chanda-II was announced by President Pervez Musharraf in early 2000. The delay is causing around $100,000 per day loss to the joint venture.