Oil and Gas Development Company Limited’s clarification of the news item regarding fault compressors at Qadirpur field project

Karachi: In compliance with KSE letter No.KSE/N-6404 dated December 2, 2011, a press release on the subject issued by OGDCL In response to a news item published in the Daily Express Tribune oil 3rd February 2012 is attached for information of your members please.

Faulty Compressor wreck Qadirpur Field Project

Apropos the news item appearing in Daily Express Tribune on 3rd February 2012 on the subject. OGDCL strongly refutes the contents of the said news item. It is unfortunate that on the basis of incorrect information, an attempt has been made to create a false impression about an important project which was successfully completed by the company and is now significantly contributing in mitigating the effects of energy shortfall. It may be mentioned that as a result (of installation of compressors at Qadirpur), the production of gas from the field has been enhanced by 100 MMCFD and the production has now surged to 520 MMCFD. The difference dearly indicates that the compressors having capacity of 33 MMSCFD are compressing more than 37 MMSCFD. The project was undertaken strictly in accordance with OGDCL Procurement Rules and Policy.

2. It is further clarified that the Performance Test of the Compressors was to be carried out in March 2011, but was postponed to June 2011 and there after it was carried out in September 2011 due to country wide energy crisis. The Performance Test has been successfully carried out and major concerns have been addressed. The correspondent has relied on an initial / interim report, the findings/recommendations of which are being implemented. The correspondent published his story before verifying the basic facts:

3. As regards to the award of contract, it is clarified that a study for reservoir assessment of Qadirpur was carried out in the year 2002 which was based on reservoir productivity which declared that the reservoir will start normal depletion from 2008. As per their recommendation, some new welts were to be added and compression facilities should be installed by end 2008. The same study was revalidated by M/s Schlumberger in 2007. Anticipating the above, OGDCL started its working in 2005 to pre-qualify a consultant. M/s ILF of Germany was awarded the job of consultancy and project management and site supervision contract in 2006 and after data input and validation of the data, the same was conveyed to 27 world renowned companies through limited tender enquiry and M/s CPECC was adjudged to be the financially lowest evaluated bidder. The contract was awarded to M/s CPECC for detail engineering, procurement, installation, erection along with commissioning.

4. During start of detail engineering phase, one of the share holders challenged the award of the contract before the Sindh High Court in order to derail the smooth execution of the project in question due to their vested interests. As a result of litigation/stay proceedings in order to avoid delay in the development of project and in view of the energy crisis, OGDCL BOD approved to look at different options on the basis of the feasibility study as an interim arrangement. Accordingly, the consultant carried out a simulation study and recommended to install wellhead compressors at each well. Tender was floated to the pre-qualified bidders. M/s ILF the consultant carried out the evaluation and recommended to award the contract to the technically qualified and financially lowest bidder (M/s Valerus USA) at a cost of US$ 58.41 million. The case before the Sindh High court was decided in OGDCL’s favor. The matter was discussed in detail with Joint Venture Partners and finally the number of compressors was reduced from 29 to 14. Accordingly the total project cost was reduced from US$ 58.41 million to US$ 20.35 million: it was decided to install the said compressors in the boundary wall of existing facility. OGDCL conducted the procurement by adopting complete transparency and adherence to the rules, the above steps were taken in the interest of the Company as well as in the national interest.

For more information, Contact:
Oil and Gas Development Company Limited
OGDC House, Jinnah Avenue,
Blue Area, Islamabad.,
Ph: (92-51) 2623072
Fax: (92-51) 9209762

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