Chinese embassy's advisory put Pakistan Petroleum Limited (PPL) into limbo as after M/s Great Wall Drilling Company (GWDC) denial it's not finding any service company for securing rig to drill its Tangna Pusht 1 well in Balochistan.
Sources said the Chinese embassy's advisory to its country's oil and gas sector companies came under discussion at operator committee meeting (OCM) on October 25.
The OCM report made available to Business Recorder showed that PPL, the operator informed Mari Gas Company Limited (MGCL), Oil and Gas Development Company Limited (OGDCL) and Government Holdings (Pvt) Limited-the joint venture partners that Great Wall Drilling Company (GWDC), China and Schlumberger Inc were contacted for drilling at Tangna Pusht-1 well but they regretted to work in Balochistan due to security reasons.
The operator apprised the meeting about the prevailing overall security situation in Balochistan and gave briefing about the land mine incident of April 2, 2006.
It was informed that several meetings were held with the Governor, Home Secretary, Balochistan government and other provincial authorities including security agencies. In these meetings the security situation was assessed. The operator said that according to the new policy, security plan would be finalised with HQ FC Balochistan after NOC to commence operations in Balochistan was given by the government of Balochistan.
The operator also informed that it has already sent advance request to HQ FC regarding planned exploration activities in Dadhar block. Replying to a query, the operator informed the meeting that it was planning to meet IG FC Balochistan next week to discuss the modalities for security arrangements.
MGCL asked about the status of security contract and compensation to deceased levies/local guards and in its response the operator replied that security contract had been terminated and compensation was paid to the families of six security personnel killed during land mine incident.
The operator added that the land mines posed a major threat to safe operations. KUFPEC suggested that a private agency may be hired for mine clearing or a clause may be included in the contract of access/site construction for clearing the landmines.
The operator informed that no such agency was available in Pakistan and mine-sweeping would be done by the FC.
The operator informed the meeting that exploration licence for the block was valid up to September 18. Its representatives held a meeting with DGPC on August 24, to brief him about the hindrances in implementing the work programme which were beyond operator's control. The operator said that DGPC was requested for one-year extension in the contract.
The operator provided an overview of the work program, security situation and efforts made by it to restart to complete remaining work.
KUFPEC asked about operator's efforts to acquire Chinese rig from OGDCL as was mentioned in the last meeting. The operator informed that OGDCL had indicated that one Chinese rig was available for operation, but Chinese contractor refused to carry out operations in Balochistan.
The operator added that Chinese contractor informed that they have strict instructions from their embassy in Pakistan not to conduct any activity in Balochistan without its approval.
DGPC asked about the availability of other rigs.In its response operator informed that in the last technical committee meeting.the operator committee meeting (TCM/OCM) they invited proposal for rig through press tender and four contractors collected the bid documents, but only one contractor M/s Oil and Gas Engineering Company, SPA submitted the bid.
The operator added that even OGEC-SPA declined to provide the rig and operator forfeited their bid bond.
The operator told the meeting it also contacted overseas drilling contractors. A Gulf-based company showed interest, but it required for a long term contract at $29,000/day rental which was considered too costly and for the same it was not supported by the joint venture (JV) partners.
The operator informed that re-bidding of the services is recommended when it secures the rig, as Petroservices, an Egyptian company, the single bidder indicated to increase Its bid by 60 percent and requires letter of intent (LOI) before 31 December, 2OO6.
The operator informed that one bidder, MI Swaco, out of three has withdrawn its bid. It proposed for holding the existing bids valid as still the other two bidders agreed to their quoted prices.
The 0perator recommended accepting extension offer of Schlumberger Seaco bid rates, as Baker Atlas has wrapped up from Pakistan, the operator told the meeting that if the new bids were invited then Schlumberger would likely to increase the rates.
The operator informed the meeting that both bidders (Haliburton & Dowell Schlumberger) had declined to extend the validity of their offer. It proposed to invite new bids for cementing services, when it secure the rig or ask for financial bids from these two companies, when required.
The operator presented the status of access I site preparation for Tangna Pusht-1 well and informed that 40 percent of the planned work was completed before the tragic landmine incident on April 2, 2006. However, it was feared that recent heavy rains may have caused serious damage to the incomplete causeway in Bolan river and other construction. The operator recommended that after the landmine blast the construction team had to vacate the area in emergency and the site was left unattended. The meeting was informed that a site visit was planned as soon as security situation improves, to assess the damage of the construction work, estimate the volume of remaining work and sot time frame required to complete the work.
MGCL inquired about insurance cover for access / site, to which the operator replied that such projects were not insured but it may consider the case in the future. MGCL asked about the provision for acquiring land for more than one year and operator told the meeting that generally land was acquired for one year. MGCL observed that 40 percent of the planned work has been completed by the contractor but the payment made was more than 40 percent. The operator clarified that total payment made to the contractor was 28.736 million rupees which also included the reimbursement of material cost purchased by the contractor for site construction and this material had been stored at PPL site.