The Sui Northern Gas Pipeline Company Limited (SNGPL) has voiced opposition to the proposed allocation of 50% indigenous gas from new discoveries to politically influential third-party entities.
The proposed amendments to the Petroleum (Exploration and Production) Policy 2012 are set to be presented before the Council of Common Interests (CCI) today.
SNGPL contends that it did not receive prior consultation on the summary for CCI, emphasizing the potentially wide-ranging implications on the energy supply chain and vital sectors such as export, fertilizer, and domestic consumption.
The gas utility company suggests that comprehensive consultations and a thorough impact assessment are necessary before presenting the proposal to the CCI.
In preliminary comments submitted on the summary, SNGPL highlights several concerns. These include pending payments to exploration and production (E&P) companies due to the prevailing circular debt situation, delays in increasing sale prices by successive governments, and the diversion of expensive Re-Gasified Liquefied Natural Gas (RLNG) to low-tariff domestic sectors.
SNGPL underscores the importance of a holistic evaluation, stating that changes in gas allocation could affect various economic sectors, with gas serving as a lifeline for many.
The company expresses concerns that allocating 50% of indigenous supplies to third parties may lead to market arbitrage and imperfections, potentially impacting sectors paying full RLNG prices.
Moreover, the gas utility company warns of potential repercussions, including a ballooning circular debt, low recovery of RLNG tariff, potential collapse of the RLNG supply chain, and adverse impacts on gas companies and the public at large.
SNGPL also suggests a potential increase in sale prices for domestic and subsidized sectors, leading to public outcry and compromised export sectors.
SNGPL proposes a roadmap for the opening up of the E&P sector, emphasizing the need for a level playing field, competitive pricing, and the elimination of cross-subsidies.
The company also calls for early implementation of country-wide Weighted Average Cost of Gas (WACOG) to address market anomalies.
Good job SNGP for showing such problem