Home »Top Stories » MPCL unhappy with ECC decision
Mari Petroleum Company Limited (MPCL) is reportedly unhappy with the ECC decision regarding allocation of additional 66 MMCFD gas for fertilizer sector meant to bridge gap in urea production and requirement, well informed sources told Business Recorder.

The company''s position has been conveyed by its Managing Director/ CEO, Lt. General Nadeem Ahmad(retired) in a letter to Finance Minister, Asad Umar who is also the Chairman of the ECC. According to MPCL, this issue is related about its request regarding allocation of 66 MMSCFD additional Mari deep gas to MPCL for setting up a 180 MW Combined Cycle Power Plant (CCGT), adding that reportedly, the ECC in its meeting of December 4,2018 has directed Industries & Production Division to explore possibility of utilization of the said gas for fertilizer sector.

Clarification company''s position, CEO in his letter said that 66 MMSCFD gas is presently not available and shall become available for supply not before 2021-2022 after the drilling of additional 6-7 deep wells, laying of in-field gas gathering pipeline network, completion of production and metering facilities and other associated development activities. The proposal for MPCL''s Power Plant and its anticipated COD is synchronized with the availability of the said 66 MMSCFD gas.

He further stated that the optimum utilization of Low-BTU gas worldwide is for power generation, vis-à-vis its consumption by any other industry which entails unnecessary and uneconomical costs on gas processing.

The Power Generation Policy 2015 granted E&P companies with low BTU gas discoveries, the right of first refusal to set up gas fired power plant to bring on stream all such gas for generation of low cost electricity. Pursuant to the policy MPCL has initiated plans to set up its own 180 MW Independent Power Plant (IPP) based on the gas potentials of its Mari Gas Field''s low BTU Goru-B Reservoir, in terms of clause 6.3 (ii) of the said Policy.

According to MD, MPCL, third party reservoir study, carried out by M/s Gaffney, Cline & Associates, confirms that the said reservoir based on drilling of additional deep wells has the potential to produce 66 MMSCFD low BTU gas for a plateau period of 25 years required to operate the proposed power plant, over and above its existing allocation of 65 MMCFD to Foundation Power and 44 MMCFD to Star Power.

He further claimed that MPCL has already completed a bankable feasibility study, which include all the requirements for a typical PPIB Letter of Intent (LoI) for carrying out bankable feasibility studies on raw sites. The proposed project will be based on state-of-the-art gas turbines, and will have a thermal efficiency in the range of 52-53% leading to a very attractive tariff for a 25 year PPA based on low-cost indigenous fuel i.e. levelized tariff of approx. 7.35 cents per Kwh. The competitive tariff of approximately 7.35 cents per kwh would place MPCL''s proposed project very high in NTDC''s merit order.

Lt. General Nadeem Ahmad(retired) further claimed MPCL is poised to immediately proceed with the tendering phase to achieve financial close, and thereafter with a fast-tracked construction period to accomplish COD for a targeted commencement of low cost electricity supply to the national grid by 2023.

"MPCL has developed deep reservoir for power sector on the basis of its suitability for power generation as per international standard practices and accordingly plans its further development in pursuance of Government''s 2015 Power Policy and to compliment Government''s endeavours in achieving efficient/optimum utilization of the country''s valuable/depleting indigenous hydrocarbon resources and to bring down the country''s average cost of power generation through optimization/rationalization of its input fuel costs and facilitate the Government in weeding out inefficient power plants," he continued.

MPCL has argued that fertilizer plants based on Mari Field''s gas have been supplied gas on 24/7 basis and without any interruption of supply whatsoever by MPCL for more than 50 years. Moreover, MPCL has been continuingly extending the terms of these fertilizer plants'' Gas Purchase & Sale Agreements (GPSA) beyond their original 20 years contract period. Being cognizant of fertilizer industry''s importance for Pakistan''s economy, MPCL is incurring a capital outlay of $ 100 million plus to extend gas supplies to fertilizer customers by another four years as well as make available an additional 95 MMSCFD gas from its Mari Gas Field to the fertilizer industry. MPCL supplies more than 05% of Pakistan''s fertilizer industry. MPCL supplies more than 95% of Pakistan''s fertilizer Industries'' gas requirements.

"MPCL''s proposal for low BTU gas power plant is in pursuance of the right granted to low BTU gas producers by the Government''s Power Generation Policy 2015 which would not only generate low cost electricity but will also accrue multiple revenues to the Government on account of foreign exchange savings, royalty, taxes & levies form sales of low BTU gas; as well as Government revenues from sale of low cost electricity and foreign exchange savings from substituting imported fuels such as RLNG, fuel oils etc," he maintained.

The company is of the view that in order to implement the project on fast-track basis for low cost power generation, it requests the Government for its consideration and expeditious approval of the allocation of 66 MMSCFD gas (applied on June 1st 2018) for MPCL''s 180 MW Combined Cycle Power Plant, adding that considering MPCL is the low BTU gas producer, originator of request for allocation and major stakeholder in the matter should be taken on board in the deliberations.

Copyright Business Recorder, 2019


the author

I did graduation from the Government Murray College Sialkot and MSc in Psychology from the University of Punjab. I am in journalism since 1990. I worked in Daily Nawa-i-Waqt as sub editor and staff reporter in Daily Pakistan and Daily Din prior to joining Daily Business Recorder. I have been associated with this newspaper since 2000 as staff reporter. Energy Sector, Commerce / Trade and Industries are key areas of my interest. I have also the credit of exposing number of scams like Rental Power Plants (RPPs), LNG, sugar import, etc.

Top
Close
Close