ISLAMABAD: The petroleum ministry has called for an investigation into a delayed action by the Oil and Gas Development Company in installing compression facilities at the Qadirpur gas field despite government approvals about 10 months ago, putting 20 per cent of the country’s gas production at risk.
Sources in the petroleum ministry told Dawn on Friday that the ministry had asked the OGDCL management through its representative on the board of directors and formal communication to hold an investigation as to why the compression facilities had been delayed and fix responsibility for the failure.
The sources confirmed that initially the contract for installing the front-end compression at the Qadirpur field was awarded to China Petroleum in 2006, but due to litigation until January 2009, the installation was delayed.
They said that after culmination of the litigation the government approved in February 2009 a revised plan for installation of compression facilities.
An implementation plan was approved in May 2009, but the OGDCL management still could not launch the process.
The sources said that soon after the approval was granted the government and the OGDCL management were on a strong footing to award the contract because the original cost of the contract had been drastically reduced over the years despite rising inflation and currency depreciation during 2006-09.
They explained that the contract cost approved in 2006 was $78 million, which was revised downwards to $48 million and finally fixed at $22 million on the basis of negotiations with contractors.
Yet, the OGDCL failed to move ahead with the installation process at the required pace.
The sources said that the company’s board of directors in some meetings had even identified the people responsible for the unnecessary delays and extended support to the management to get rid of those officials.
Senior officials told Dawn that the petroleum ministry was now monitoring the process of installation of compression facilities through the SNGPL and Enar on a day-to-day basis to avoid further wastage of time.
They said the federal petroleum minister himself had held a meeting with the OGDCL management on Thursday to speed up the process. The minister was also coordinating with the prime minister’s secretariat and defence ministry for their support.
These sources confirmed that OGDCL Managing Director Zahid Hussain had submitted his resignation to the minister and the secretary petroleum about a month ago when he faced pressure because of delays in the award of contracts. The resignation has neither been accepted nor withdrawn, a senior official said.
Meanwhile, in response to a Dawn report, the OGDCL said that an order for procurement of compressors packages had been placed and ‘the equipment is expected to arrive in January-February 2010. Procurement of ancillary equipment and material is in process’.
In a statement, the company claimed that ‘the impression, that it is unlikely that gas could be injected into the system due to back pressure of SNGPL pipeline as the reservoir pressure would be declined to 1000psi, is incorrect’.
The company seems to have ignored that on page one of an Oct 26, 2009, letter to the secretary petroleum, the OGDC managing director himself reported that ‘reservoir pressure has declined from 2050psi to 1100psi’.
He also stated that the ‘decline rate has been approx 100psi per year’ since 1995.
On page 9 of the report attached with MD’s letter, it is mentioned that ‘it is likely that due to back pressure of SNGPL line we will not be able to inject the available gas into the SNGPL system’.
In the concluding paragraph, the managing director reported that ‘beyond June-2010 it is likely that NO GAS could be injected into system due to back pressure of SNGPL as the reservoir pressure would have declined to 1000psi’.
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