Pakistan gives go-ahead for Bhit gas development

UK explorer Premier Oil Plc said yesterday the Pakistan goverment had approved development of the one trillion cubic feet Bhit natural gas field in which it has an interest. First gas is expected by the end of 2002 with production seen building to a plateau rate of 235 million cubic feet per day early the following year.

"This is a significant milestone for Premier's business in Pakistan and further demonstrates the resolve of the Pakistan government to speed the development of the country's natural gas resources," Chief Executive Charles Jamieson said.

The deal, along with a gas pricing agreement, allows the full-scale development of Bhit to start with the first stage expected to require an investment of around $260 million. Bhit is managed by Britain's Lasmo Plc - which is in the process of being taken over by Amerada Hess Corp of the United States - together with joint-venture partners Premier Shell Pakistan (PSP) and the state-run Oil and Gas Development Authority (OGDCL).

Hess and Malaysian state oil firm Petronas each hold a 25 per cent stake in Premier, whose key operations are in the UK, Indonesia and Myanmar as well as Pakistan. Meanwhile, Shell Pakistan said yesterday it had resolved a row with oil tanker owners who had threatened to stop undertaking petroleum supplies for the company.

"All matters have been resolved with the oil tankers' union... Effective 11am today (tanker) operations have been normal," a company spokesman told Reuters. An agreement between Shell and All Pakistan Oil Tankers Owners Association was reached late on Saturday near Multan in the Punjab province after the local authorities and army officials intervened to resolve the standoff.

But the spokesman said even before the agreement its supplies had not been disrupted because the company had made its own arrangements to keep supplies running. Company sources said the row began in early November when the company refused to allow oil tankers to lift motor gasoline from Pak-Arab Refinery Ltd (PARCO) in central Pakistan on below standard vehicles or non-ADR standards.

The 4.5 million tonne refinery which was commissioned in late August is a joint venture between the governments of Pakistan and Abu Dhabi. Shell said it started using its own high safety ADR vehicles to lift motor gasoline from the refinery under an agreement to maintain quality standards.

The oil tankers' union protested at the company's decision and refused to supply most of the petroleum products out of the PARCO refinery for Shell in some of the key places in the populous Punjab province.

In the ensuing standoff, one of Shell's petrol pump was also attacked allegedly by tank owners while last week the union threatened to stop lifting supplies from all Shell installations in Pakistan from Monday.

The company spokesman said under the agreement 35 percent of motor gasoline will be supplied to non-ADR vehicles for only six months so that tank owners have time to purchase quality vehicles. The tank owners responsible for an attack on a Shell pump will have to pay damages to the company, he said.