ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) has advised sui gas companies Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) that payments to producers of local natural gas be restricted to 75 per cent in case of a price notification is not issued.
In a letter to the managing directors (MDs) of the two gas utilities, the authority has advised that payment to producers of natural gas be made strictly on price notifications.
In case provisional payment is justified, it may be restricted to 75pc of the last notified price till such time that producers submit the requisite notification for the relevant period to the gas companies, a letter by OGRA stated.
It has been observed that the payment, in respect of some producers, is made without prescribed document inter-alia well-head price notification leaving room for retroactive adjustment, which in case of such eventuality, impacts consumers resulting in economic distortion, the letter added.
According to sources, the advice might affect the sale of cheap local gas to the consumers while producers might restrict production during the winter, impacting domestic, commercial and industrial categories of consumers.
Sources opined that the secretary Petroleum should make efforts to resolve issues pertaining to the injection of local natural gas into the main gas system without a price notification to meet the burgeoning energy needs of the country.
Expressing surprise, sources also said that OGRA has allegedly been creating hurdles in the use of $3/MMBTU price of local natural gas by consumers while the government has been assuring its support and cooperation to commodity traders for import of approximately $15/MMBTU price of Liquefied Natural Gas (LNG).
They said that efforts are allegedly underway to level the field for the use of expansive LNG and furnace oil to meet energy requirements of the country.
It may be mentioned here that foreign exchange reserves face serious pressure due to the import of imported fuels whereas LNG prices are already sky-high due to gas shortage and ongoing winter season.
Further, sources claimed that exploration and production (E&P) companies are being forced to scale down operations owing to the attitude of officials of the petroleum division, directorate general of petroleum concession (DGPC) and OGRA.
It is pertinent to mention here that a 25pc cut in the payments of oil and gas companies will also affect their exploration and production operations, especially drilling of oil and gas wells, seismic surveys etc.
