MPCL Managing Director, Lt Gen Nadeem Ahmed (Retd) revealed that Mari Petroleum Company Limited (MPCL) is going to establish a 400 megawatt (MW) power plant at Dharki/Sadiqabad.
Mari Petroleum is the country’s leading gas producer which’s 40 percent shareholding rests with Fauji Foundation of Pakistan Army, 20 percent with Oil and Gas Development Company (OGDC), over 18 percent with Government of Pakistan and rest with private stakeholders.
To be completed at a “standard” cost of $400 million, the gas-based power generation project would be set up under Energy Policy 2015. The official document, according to Ahmed, entitled the low BTU (British Thermal Unit) gas producing firms to the right of first refusal to become an Independent Power Producer (IPP).
“The government said you (MPCL) establish the IPP and give us spec gas” the production of which, the MD said, was quite capital-intensive. “Spending $15 million on a well and as much on the processing facility makes it an exorbitant venture,” he said.
About plant site, Ahmed said, two locations were being reviewed: first at Mari’s Dharki gas fields and second at Sadiqabad “where the law and order is, relatively, better.”
“Not one or two but many strategic investors have started approaching us for this project,” the MD said adding his side had already taken the nod of regulators and stakeholders like National Power Regularity Authority, National Transmission and Dispatch Company, Private Power and Infrastructure Board, Central Power Purchasing Agency and secretary ministry of water and power.
“We would be seeking our Board’s approval probably in September,” the MD said.
For all this to materialize, however, MPCL would have to ensure that it has enough gas reserves to sustainably fuel its power plant in future. “We are in consultation with feasibility firms to examine the total capacity of our fields,” he said. The official said the first interpretation of a seismic survey MPCL had conducted in 2012 indicated that more gas reserves were existed at Mari fields, Dharki.
Adding an IPP portfolio, he said would save his company the gas processing cost besides getting up to $6 incentive price.
The diversification move, as he indicated, came after the company underwent some financial setbacks because of the shortage of much-needed exploration funds under the now-dismantled pre-cost plus fixed return formula and a huge slump in international oil prices.
Since its $110 per barrel peak in June 2014, benchmark British Brent was once seen having “bottomed out” to $23 level. “Thanks to incremental production, we stayed in green having Rs88 billion revenue in FY15 and Rs95 billion last year (FY16),” the managing director said.
Currently producing 696 million cubic feet per day (mmcfd) gas and 3,300 barrels per day (bbl) oil, MPCL has 100 percent operating interest in 11 of its 17 countrywide hydrocarbon fields.