Production from two major gas fields stopped
The government has stopped production of cheap gas from two major fields and drastically reduced production from a third one to ensure smooth flow of expensive imported liquefied natural gas (LNG) into the gas network facing capacity constraints.
A senior petroleum ministry official said gas production from the country's oldest Sui field in Balochistan and Nashpa field in Khyber Pakhtunkhwa had been completely stopped, while that from the Qadirpur field in Sindh had been reduced by almost half.
"The massive shutdown of over 327m cubic feet per day (mmcfd) from domestic sources was unprecedented and necessitated by lower than committed off-take by the power sector," he added.
The official said the reduction in indigenous gas supplies was made to run LNG Terminal-I at 690mmcfd, adding that production from Sui and Nashpa fields was reduced to zero from 185mmcfd and 85mmcfd, respectively, while that from the Qadirpur field to 88mmcfd from 145mmcfd.
Even after this reduction, the line pack in the SNGPL (Sui Northern Gas Pipelines Limited) network is still running at about 4800mmcfd and RLNG consumption by the power sector is around 650mmcfd against the targeted 850mmcfd. The official said the power sector had been on average lifting 150mmcfd lower than its orders for almost two months. The SNGPL had booked these orders on a firm "take or pay" basis - meaning it has to pay for the commodity even if it is unable to utilise it.
On the other hand, the PSO had been unable to discharge its RLNG cargo from Gunvor accordingly and is set to be hit by a $5 million penalty on Monday on a "take or pay" basis. The cost of domestic gas supply is currently less than $5 per mmbtu, compared to more than double the cost of imported LNG at around $11.
Gas companies and the PSO have been agitating the issue at the highest level for almost six weeks now. Interestingly, both the power and petroleum divisions are now under the administrative control of the energy ministry, led by federal minister Omar Ayub Khan and assisted by the prime minister's adviser Nadeem Babar.
The PSO and SNGPL had sought intervention of the energy ministry and the Prime Minister's Office in resolving an issue involving safety of the gas network, financial costs to the national exchequer and international penalties.