Pakistan’s natural gas supply has significantly increased with the start of production from a recently drilled well in Dera Bugti, Balochistan, by the Oil and Gas Development Company Limited (OGDCL).
The Uch-35 well is currently producing five million standard cubic feet of gas per day (MMSCFD), according to a letter sent to the Pakistan Stock Exchange. The Uch Gas Processing Plant has effectively incorporated this gas output, aiding in the distribution and management of the supplementary gas supply.
OGDCL, Pakistan’s biggest exploration and production firm, is the sole owner of the Dera Bugti well, while in a related development, on November 12, the Pakistani government decided to halt the purchase of imported liquefied natural gas (LNG) and reallocate it for domestic consumption, following a drop in electricity usage.
According to Ministry of Petroleum documents, it will cost Rs163 billion to supply LNG to domestic users. According to sources, pipes are under daily strain from imported LNG. It was also confirmed that the power sector had been consuming 600 million cubic feet per day (MMcfd) of LNG.
While the gas industry continues to generate Rs400 billion in revenue from captive power plants, the closure of captive power projects will result in an excess of 150 MMcfd of LNG. The administration intends to increase gas taxes and eliminate the price differential between domestically produced gas and imported LNG in order to address the circular debt issue.
Currently, the tariff for local gas is Rs. 1,550 per MMcfd, while the tariff for imported LNG stands at Rs. 3,500 per MMcfd. By aligning these tariffs, the government anticipates generating Rs200 billion in additional revenue. Furthermore, the government also plans to increase tariffs for fertilizer companies as part of its broader strategy to enhance revenue.
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