Iran sets March 19 deadline for fixing IPI gas price

[LahoreEstate]

RECORDER REPORT
ISLAMABAD (March 06 2009): Iran has set a deadline of March 19 to settle the gas price formula and Pakistan is trying to settle a price within next ten days. "Iran has given a deadline of gas price fixation by March 19 and we are trying to have a formula approved and sign some contract within the next ten days", Secretary Ministry of Petroleum Mahmud Saleem told Senate Committee of Petroleum. However, he said that price demand by Iran is too high.

The price demanded by Iran is not viable to offer to domestic consumers, which are on subsidised rates, while only option left is to offer for electricity generation, said Mahmud.

He also said that the in last two years gas prices have increased a lot and in case such an agreement had been signed two years back, Pakistan could have availed much lower price. Now the Ministry of Petroleum would refer the recommended price to the cabinet for approval before going to sign any agreement.

Earlier, Pakistan has also considered scrapping the idea of IPI gas pipeline. "We would take this issue to the parliament as Iran is demanding a price that is not viable for domestic consumers and CNG industry and only power generation is viable from that, says Petroleum Advisor Dr Asim Hussain talking to media Friday.

Iran also wants to increase price in every two years. Pakistan has also not financing for the project, which if country needs would be taken from international donors, adds Dr Asim. It is being considered to break up OGDCL into two companies, one concentrating on exploration only and the other on oil and gas production form existing wells.

For local exploration opportunities production bonus in new petroleum policy just announced would be directly credited to provincial government than federal government. This would help resolve grievances of provinces.

In Balochistan, the province bordering Afghanistan, exploration activities are suffering from attacks on companies' employees and gas pipelines are blown up by extremist elements. Various companies are now digging 25 exploratory wells in Balochistan.

Petroleum Ministry is also planning to set up security fund to appoint local employees for security of the company. A total of 40 rigs are working in country, 20 with OGDCL and 20 with other companies of private sector. An Italian company, ENI, is hopeful for a gas reserves 200 miles offshore.

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