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If immediate steps are not taken the country will be deprived of about 690 million cubic feet of gas a day.—File photo

ISLAMABAD Pakistan's third largest gas producing field in Qadirpur is on the verge of collapse due to inordinate delay in installation of 16 compression plants.

If immediate steps are not taken the country will be deprived of about 690 million cubic feet of gas a day, or over 20 per cent of current production.

As a result, the national gas shortfalls at about one billion cubic feet per day (BCFD) this year would go beyond 2.5 BCFD next year and increase dependence on expensive imported fuels.

Pakistan currently produces about 3.7 BCFD of natural gas and the shortfall may grow next year by another 1 BCFD due to higher demand.

The Qadirpur fiasco, said official sources, would also cause billions of rupees in damages because of failure to supply dedicated gas quantities to private consumers.

On top of that, the government will be paying over Rs8 billion to the Qadirpur producers in arrears on account of higher international oil prices as the government has failed to timely revise the gas price formula as required under the Qadirpur gas sales and purchase agreement.

And this payment is expected to be made to the Qadirpur joint venture without a thorough probe into the issue and despite repeated calls by the directorate general of gas to fix responsibility for delayed gas price negotiations.

Background interviews with government officials and documents available with Dawn suggest that a fire-fighting exercise by the Petroleum Ministry and the Qadirpur operator — Oil and Gas Development Company Limited — to save the field from 'complete collapse' through installation of compressors in four months is bound to backfire because the implementation process lacks technical and professional handling.

Almost all technical studies conducted by the OGDCL predict that the Qadirpur gas field would stop producing gas, leaving more than 40 per cent of the 5 trillion cubic feet reserves unutilised and create severe shortages much sooner than anticipated.

'Beyond June 2010, it is unlikely that gas could be injected into (the) system due to back pressure of SNGPL pipeline as the reservoir pressure would have declined to 1000 psi' — a stage when low pressure hampers gas production, concedes a note submitted by the OGDCL to the government.

'Appreciable declining trend (in gas production) is observed which is due to high gas off-take, mounting up to 2.5 per cent per month in future. Reservoir pressure has declined from 2050 psi to 1100 psi', the note added.

The company said the original reservoir pressure of Qadirpur field was 2064 psi which had declined after production of 1.197 TCF gas to around 1100 psi, declining further at the rate of approximately 100 psi per year.

The reservoir pressure decline profile in Qadirpur indicated that the reservoir drive mechanism is gas expansion only as 'the reservoir pressure has declined steadily and pressure maintenance due to water encroachment has not been observed'.

In an explanation to the petroleum ministry, the OGDCL said it was a common industry practice to install the compression six months earlier than the expected compression date.

The work on compression was started well in time on recommendations of PGS of the UK. 'The contract for installation of frond-end compression at the field was awarded to China Petroleum in 2006 but due to litigation from December 2006 to January 2009, it has been delayed.'

The company did not explain why it had not been able since January 2009 to install the compression facilities.

'It's a clear case of mismanagement from all aspects, from gas price revision to compression facilities... no blame-game would be acceptable and relevant people would have to be held responsible,' said a senior government official.

As a last-ditch effort to avoid closure of the field forever, the petroleum ministry had set in motion an emergency plan, he said, adding that a few compressors kept as spares at Pirkoh field and a few others imported by the OGDCL were being moved to the Qadirpur field to see if pressure required for gas production could be maintained.

He said the defence authorities were being persuaded to import equipment and machinery required for compression as part of defence purchases as a special case to bypass normal procurement laws involving longer period of time for such purchases. 'It would really be a miracle if we are able to avoid the collapse,' he said.

The sources said the installation of gas compressors in two phases - 10 compressors by April and six by June - had now been assigned to the Sui Northern Gas Pipelines Limited (SNGPL) although its managing director had expressed reservations to complete the project under the tight deadline because the minimum time required was 10 months.

Simultaneously, the job for procurement of compressors had now been assigned to Enar, a company which was originally engaged for designing the joint compression facilities, but it had no experience in procurement, the sources said.

The Qadirpur compression should have been completed about 15 months ago as recommended by a number of international experts when reservoir reached 50 per cent depletion to maintain its plateau. The depletion has now gone beyond 60 per cent.

The sources said a government commitment to ensure about 100 MMCFD of dedicated gas supplies to a billion dollar fertiliser plant was unlikely to be honoured, exposing the government and the government-owned SNGPL to heavy penalties.

'Due to delay in the installation of compression, the field is on continuous decline and target of producing 690 MMCFD of raw gas has not been achieved so far,' the OGDCL confirmed.

The sources said under the gas sales and purchase agreement, the government should have renegotiated the Qadirpur wellhead price two years ago when international furnace oil prices crossed $200 per metric tonne, but it failed to do so despite reminders by the Oil and Gas Regulatory Authority and the directorate general of gas.

When the government started renegotiations with the producers, the sources said, the furnace oil prices had already gone beyond $400 per metric tonne.

The sources told Dawn on Wednesday that a case covering delayed negotiations in Qadirpur gas sales purchase agreement, resultant payment of about Rs8 billion to the joint venture partners, delayed execution of multi-million dollar compressor installation project and possible collapse of the gas field would be taken up by the Economic Coordination Committee of the cabinet on Dec 15.