Kandhkot Field: PPL Seeks Govt Nod to Produce More Gas

Pakistan Petroleum Limited (PPL) has sought government nod to produce additional 125 mmcfd gas from Kandhkot gas field to sell to any other buyer, revealing that Genco-IIs 747 MW unit is going to be sold to third party.

In a letter to MD/CEO, Genco Holding Company Limited (GHCL), a senior official of PPL Abid Ashfaque Malick has also proposed constitution of a committee to review everything in historical perspective instead of going back to square one and starting all over again, adding that time is of essence, as the nation is starved of gas, and “we are compelled to import very expensive LNG.”

Sharing the background of his new proposal, he has cited the letter of December 16, 2021, on the proposed Terms of Reference (ToRs), adding that PPL reviewed in detail the suggested ToRs and noted that all suggested actions have already been taken in past under recommendation of Ministry of Energy. Regarding the capacity and capability of CPGCL gas offtakes, this has been in very active discussion at the very top levels between the Petroleum and Power Divisions since early last year.

As per the SAPM directives at that time a 24 hour deliverability test was arranged in 2020 by MoE. The results of the test were presented in a meeting attended by all stakeholders including SAPM-PD which clearly indicated the incapacity of CPGCL to take the contractual gas volume (250 mmcfd) and directed CPGCL to release spare gas above 150 mmcfd. This was the decision at that time, however, the situation has become far more grave, as the average offtake per year since 2019 till today speaks for itself.

According to the letter, minutes of the meeting held on February 24, 2021 which was attended by Minister of Energy and SAPMs of both Petroleum and Power Divisions, clearly recorded that “SAPM on Power was of the view that old units of Genco-II are to be decommissioned by 1½ year time and thus Genco-l cannot withhold excess gas allocation which can be utilized for other economic activity.” He emphasized that Power Division must examine the requirement of gas considering seasonal effect and utilization capacity.

Secretary, Power Division endorsed the viewpoint of SAPM on Petroleum and SAPM on Power and sought a week’s time to revert. The representative of PPL informed that it has been consistently reporting underutilization of Kandhkot gas by Genco-Il and re-allocation of up to 100 mmcfd gas to any other buyer. PPL’s representative informed that PPL can provide additional gas in national network in winter of 2021 provided decision of gas volumes is made as soon as possible. It was further stated that in case of emergency or short- term need, additional gas can be provided on an “as available” basis, after release of this 100 mmcfd.

CPGCL in its letter of July 2, 2021 also referred CCoE decision according to which the old units of CPGCL are recommended for permanent shutdown.

“We understand that Genco’s two 747 units have good efficiency as compared to other units which is the prime reason for underutilization of the Genco’s production capacity in the presence of other inefficient units. The maximum gas-offtakes of these units together is not more than 150 mmcfd,” he added.

PPL also informed that GSA agreed and signed between CPGCL and PPL is for gas offtakes of 200 mmcfd, accordingly Take-or-Pay amount 145 mmcfd (72.5% of 200 mmcfd). The clause 6 of the GSA stipulates that “the rate of ACQ after first three twelve months’ period for the remaining period will be reviewed and decided by the parties with mutual consent keeping in view the Kandhkot gas field reservoir behavior and study.” PPL KGF has already initiated request to CPGCL for a meeting for which reply from CPGCL is still awaited.

SAPM on Power and Petroleum Division has suggested the Power Division to spare 100 mmcfd surplus volume from Kandhkot. In this regard, DG-Gas has requested Power Division for its consent on May 4, 2021.

In view of above, PPL once again has reiterated that Genco-II is and will not be able to take the maximum gas offtakes from KGF as: (i) it is evident from the historical record of gas offtakes; and(ii) its 747 unit is going to be sold to a third party soon, hence, following ToRs are suggested that constitute a committee with members from Petroleum and Power Division including PPL and CPGCL, to review relevant correspondences, minutes of meeting, last two years and current offtakes data, Kandhkot field deliverability test run data, evaluate Genco’s machines health and the CCoE decision. This would mean reviewing everything in historical perspective instead of going back to square one and starting all over again.

The time is of essence, as the nation is starved of gas, and “we are compelled to import very expensive LNG, while PPL has the capacity to produce 125 mmcfd gas from Kandhkot Gas Field, on the basis of historically low gas offtake by Genco.”

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