Pakistan signs preliminary gas price pact with Bhit JV

Pakistan and the consortium exploring Bhit gas field in Sindh province have signed a heads of agreement laying down the broad principles for the gas sales and price agreement for the field, according to a statement issued by the Petroleum Ministry.


KARACHI�Pakistan and the consortium exploring Bhit gas field in Sindh province have signed a heads of agreement laying down the broad principles for the gas sales and price agreement for the field, according to a statement issued by the Petroleum Ministry. Partners in Bhit field are operator Lasmo PLC (40%); Kirther Pakistan BV, a subsidiary of the joint venture of Premier Oil PLC and Shell Pakistan BV (40%); and Oil & Gas Development Co. Ltd. (20%). Sui Southern Gas Co. Ltd. will purchase the gas from the Bhit JV.

The ministry said it considers the signing of the pact a major breakthrough in the previously stalled development of the gas resources in the Kirthar Range.

The ministry hopes the agreement will pave the way for other producers to expedite the development of their discoveries�e.g., Zamzama�which are expected to bring about 400-500 MMcfd of additional gas supplies. These supplies will help replace imported fuel oil and kerosine in the domestic sector to save precious foreign exchange.

Bhit field was discovered by Lasmo in 1997. The joint venture carried out the appraisal of the field and established recoverable gas reserves at about 1 tcf. The companies declared the field commercially viable in September 1999 after collecting 800 line-km of seismic data and drilling four wells.

The field should come on stream by September 2002 and is expected to produce about 260 MMcfd of gas. The Bhit JV plans to spend $256 million on the drilling of at least three additional development wells plus the installation of a gas processing plant.

Pakistan has experienced difficulties reaching agreement with operators on gas prices when negotiating gas sales-purchase agreements, causing delays in development of gas reserves in the country. State-owned Sui Southern Gas recently inked a similar agreement with Pakistan Petroleum Ltd. (OGJ Online, May 30, 2000).

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