20000403

Gas purchase price

issue to be

settled soon

ASHRAF KHAN

KARACHI: "The long drawnout issue of gas purchase price will soon be settled but we will not let the multinational oil and gas companies overturn our economic policies," a senior government official said on Thursday.

He said they should not exploit the government to get big investment incentives. The official said: "Yes, they have been helpful in bringing in much needed investment and a vehicle for economic development, but we shall not lose our economic sovereignty."

Lately, Lasmo of UK and the Sui Southern Gas Company (SSGC) have been at an impasse over gas sale/purchase agreement with regard to the recoveries of Lasmo's gas-fields, namely Bhit and Badra with potential reservoirs of over two trillion cubic feet (tcf) gas.

The official said the company was unjustly asking for higher price of its low BTU gas, mulling it at par with government's other agreements with OMV or other gas companies. Though it broadly agrees with the innovative gas price formula, which the government devised as a via-media to accommodate the foreign and local gas producing companies.

In its petroleum policy 1994, which was further liberalised in 1997, the government had offered different slabs of gas price, beginning from 67.5 percent, C&F Karachi, crude oil equivalent price.

From 1996 onward several gas companies hit huge gas reservoirs lying mainly at Kirthar fold belt of Indus Delta. The officials, while negotiating purchase of gas from these companies faced the dilemma of oil price shock in the world market.

They subsequently invoked an agreement clause of opting the refusal rights of purchasing gas from these companies. After a prolong debate from each side, an innovative formula was evolved and the current gas purchase agreements are inked under the formula.

However, the official expressed hope that the deal would be hit, sooner or later, with the remaining as producers. As soon as these deals are finalised, the companies will start developing their respective gas-fields to ensure commercial supplies to the national gas distribution system.