The company is negotiating with government authorities to find an alternate buyer as previously the gas was being supplied to GENCOs for gas-based power generation, PPL told analysts at a brief.
“Kandhkot gas field is currently producing 80mmcfd of gas whereas 120mmcfd of gas is idle despite the fact that country is facing acute gas shortage,” Farhan Mahmood, Head of Research at Sherman Securities stated in a post-briefing note. Farhan, quoting the company management, pointed out since the gas had higher CO2 and H2S levels, it could not be supplied through pipeline system.
One of the options being considered was to supply gas to fertiliser or power plants, he pointed out and added that the other option was that the company might build a power unit near the gas field; however, the company was not positive it could get an approval for that being an oil and gas explorer and producer.
Mahmood, while talking to The News International, said the country might experience 800-900mmcfd gas shortage in the peak winter season and the idle gas in Kandhkot could bridge around 10-12 percent of gas shortfall in the cold season.
He further said this idle gas was present in the gas field for the last two to three years. He was of the view that installation of purification plant could bring this idle gas in the system and can save the precious dollars, spent to buy LNG (liquefied natural gas), whose rates were running high in the international market.
Analyst Iqbal Jawaid at Arif Habib Limited in post-briefing note said if the plan for alternate buyer didn’t materialise, the company would consider processing the gas by removing carbon dioxide and other gases so that it could be easily transmitted to SSGC and SNGPL.
In the briefing, the company disclosed circular debt remained a major concern with overdue receivables touching Rs251 billion (Rs93/share) in financial year ended on June 30, 2021.
In addition, the management said this number was exclusive of LPS (late payment surcharge), which was around Rs120 billion (Rs44/share). In order to resolve the issue, the government was considering various options; however the management did not comment in detail on the proposals currently being evaluated. The company also disclosed a total of 14 company-operated wells were planned for current financial year including five exploratory and nine development wells.
This is in line with average 14 wells drilled per annum in the last five years (including five exploratory and nine development wells). Regarding offshore Block 5 in Abu Dhabi, the management revealed there was a time-frame of nine years in which the company had to drill five appraisal and seven exploratory wells in consortium with other companies.
The first well was anticipated to be drilled from first quarter of 2023, the company said. Topline Securities said the PPL continued to focus on high risk/medium-high reward frontier exploration areas with seismic activities and wells (Pandrani X-1, Murad X-1 and Khipro East X-1).
Moreover, the company highlighted the block auctions held in January 2021 did not meet the selection criteria of exploration and production companies both in terms of quality and quantity value.
