Ministry allowed initiating work on LNG plant at Balochistan field
ISLAMABAD: The federal government has given the go-ahead to the Ministry of Petroleum and Natural Resources to work on a plan for inviting tenders for installing a small to medium-sized liquefied natural gas (LNG) production plant at Jhal Magsi gas field in Balochistan.
If the plan is implemented, the country will have the first LNG production plant at a gas field, which will be based on build, own and operate mechanism and save expenses on laying a gas pipeline from the field to the plant.
The government’s nod came in response to the three proposals the Ministry of Petroleum submitted to the Economic Coordination Committee (ECC) in its meeting on September 3. Apart from the LNG plant, the government also permitted the ministry to follow the remaining two proposals as well.
According to the first proposal, the ministry suggested that 15 million cubic feet of gas per day (mmcfd) from the Jhal Magsi field may be placed at the disposal of the Private Power and Infrastructure Board or the local power distribution company.
This gas will be utilised in a new short-term power plant to be built under the relevant power policy until the laying of a pipeline for gas supply to the transmission network of Sui Southern Gas Company (SSGC).
Under the second proposal, SSGC may be allowed to float a tender and invite proposals for installing a small to medium-sized LNG production plant on build, own and operate basis as well as transportation of gas. Thirdly, any other purpose that SSGC may determine for the consumption of gas.
The ECC also directed the petroleum ministry to come up with a viable and strong proposal for its consideration.
A volatile security situation has limited oil and gas exploration work in Balochistan and even public utilities are finding it hard to build gas pipelines because of resistance from different tribes.
In the summary, the petroleum ministry recalled that approval had already been given for the supply of 15 mmcfd from Oil and Gas Development Company’s Jhal Magsi field to Sui Northern Gas Pipelines and SSGC on an equal-sharing basis in February 2013.
In order to bring gas from the field to the transmission network, SSGC is required to lay an 85km pipeline up to its nearest injection point.
Earlier, the SSGC board of directors had approved development of the pipeline project in 2011 at an estimated cost of Rs878 million, but the cost was later revised upwards to Rs1.1 billion.
A contract for route survey of the pipeline was awarded in March 2012, but work on it could not be kicked off because of law and order conditions and later the contract was terminated.
According to SSGC, 70% of the pipeline area has been declared safe, which falls under the jurisdiction of Magsi tribe. However, they were demanding provision of gas to the area.
The remaining 30% of the area is covered by different tribal regions that pose a security threat due to the volatile law and order situation.
Meanwhile, OGDC said it was working on the Jhal Magsi field and would be able to supply 15 mmcfd of pipeline-quality gas.
The Ministry of Petroleum has come up with a plan to allocate gas from the field for power generation for an interim period until the construction of the pipeline.