Karak to get Rs260m as gas royalty next year

[Talal]

KARAK: During the current fiscal year, Karak district has been provided Rs140 million as gas royalty and the figure will be Rs260 million by the next year as newly discovered Noshapa oil and gas reserves have become operational.
This was stated by member of Khyber Pakhtunkhwa Assembly Mian Nisar Gul while addressing a gathering at the residence of former district naib nazim Akbar Badshah at Dab here on Saturday.
He added that according to the provincial government formula, 50 percent royalty amount would be reserved for development of Banda Daud Shah tehsil, the location of oil and gas reservoirs, while the remaining two tehsils of Karak and Takht Nusrati would get 25 percent each.
He said drilling at two more sites was under process and expressed optimism that other wells would also start operations.
Mian Nisar Gul said people should not be frustrated and each and every home of the district would get the gas facility by the year 2011, as the main transmission line has been laid throughout the district.
He added that domestic work would now be initiated to facilitate people with the gas facility. The MPA said the provincial government had taken the decision in principle that the gas royalty to Karak would be increased up to 10 percent from five percent and added that proper announcement of the enhancement of the gas royalty would be made by the chief minister in a jirga of elders of the southern district soon.
He said the jirga would have been held by now, but the recent flash floods delayed the event. He informed that another oil and gas survey company BGP would visit remaining upper parts of the Chontra area to identify more sites for drilling and asked the people to cooperate with the companies as the companies are working for their welfare.
Mian Nisar Gul said the future of the district was bright and it would be included in the list of richest districts in the next couple of years.

[Shehbaz Khan]

Brilliant !! I wish this money is used for the betterment of the people of Karak !!

[Omar Usman]

I thought of doing some calculations to get a greater picture. I may be entirely wrong (please correct me if so) The figures are coming from:

1. Dawn News http://www.dawn.com/wps/wcm/connect/...n-benefits-599
2. http://en.wikipedia.org/wiki/Natural_gas_prices
3. http://www.eia.doe.gov/kids/energy.c...ics#natgascalc

So Karak is going to get 260 Million rupees
260 million rupees = 3 million dollars = 250,000 $ per month

Considering production rate of 20 million cubic feet from only one well (DAWN), and with
1 cubic foot = 0.028 cubic meter
so
20 million cubic foot = 566,340 cubic meter

In 2009, the international natural gas price was around 4 dollars per cubic meter ... this means this worth is 2,265,360 dollars

Multiply this amount by 365, we get:

826,856,400 (826 Million Dollars)

How much should we deduct from this amount for pipeline capacity or drilling rates ???? 100 Million?? 400 Million ??? I am not sure. But whatever the expenditure cost, I guess it is safe to say that the 3 million dollar karak is getting is worth NOTHING.

+ whatever the case, I highly doubt union council members or even MPAs have any authority in such godly matters

BTW I read somewhere this amount was paid to khuday bakhalay Bugti only. Over here they are paying to an entire district.

[Talal]

Alright mate lemme just start with the concept of royalties .. In Pakistan provinces get paid about 12.5% of the net profit ( I can just finish the argument here since that would more than justify the amount ).. you goto places like canada the rate is about 30% BUT in those countries there is investment coming from the local bodies or governments whereas in this case..and the particular case being Karak which is included in the Tal Block..all the investment was done by companies and the locals only get paid the royalties which essentially is the lease for the area being used.

Following are the shareholders/Investers in this Joint Venture and I have listed their shares



1. MOL 10%
2. OGDCL 30%
3. PPL 30%
4. POL 35%
5. GHPL 35%


So you can see there is really no local investment except the royalties..and royalties essentially is a lease that is provided to people or the governing body who leases out that particular piece of land

Now not only does your calculation not apply in the way you distributed shares but there was a mistake in your calculation too..one that drastically effects your final lump sum


Only Zone One has become operational so far and the gas been excavated out of there is about 10 million cubic feet as opposed to the 20 Million cubic feet figure you posted..We would start start getting 20 Mills when work in Nashpa is completed ..you can see that from the dawn report you posted..so you see that pretty much halves all of your figures


As far as your point about payment to bugti is concerned those payments were backed up since 2003 when Bugti Sr. was killed.. Furthermore, the Bugti`s own 43,200 acres land in Uch from where all this gas was drilled..THAT is the reason why that amount is paid to one person, how big do you think this district is ?



Hope this makes it a bit more clearer

[Omar Usman]

Alright mate lemme just start with the concept of royalties .. In Pakistan provinces get paid about 12.5% of the net profit ( I can just finish the argument here since that would more than justify the amount ).. ...

I am not an outsider. I know how it works in Pakistan :-)

Following are the shareholders/Investers
1. MOL 10%
2. OGDCL 30%
3. PPL 30%
4. POL 35%
5. GHPL 35%

Thank you for letting me know on this ... I don't understand concept of shares .... but don't the above add up to 140 % Is that possible?

Only Zone One has become operational so far and the gas been excavated out of there is about 10 million cubic feet as opposed to the 20 Million cubic feet figure you posted..

I have a copy of 2008 SUI Gas Annual Report. Maybe they have put it on their website also but I haven't checked. It shows the average production capacity in MMCF/day for wells in Karak as follows:

Chanda Khuram, 7.14
Gurguri 35.5
Deli Mela 15.82
Makori 24.3

That's a total of 82.76 MMCF which according to the same calculations add to $ 3,421,531,783.2

This amount does not consider 4 Manzalai wells of the Tal block that you just mentioend ... which in January 2010 has increased capacity to 40MMCF (Check MOL website)

As far as your point about payment to bugti is concerned those payments were backed up since 2003 when Bugti Sr. was killed.. ...

Back in April 2010, the Lahore High Court ordered OGDCL to pay Bugti Jr. (who shares same name with you) 506 Million royalty (5.8 Million Dollars) Pakistan News Service - PakTribune

The money should not have been backed up if it is his entitled right.

This just shows that award of loyalty "IN PAKISTAN" is not a simple game of percentages ... It is a weapon used for playing politics.

Hope this makes it a bit more clearer

It is already clear to me. Karak is not getting what it deserves. 3 Million is NOTHING.

Edit: If provinces get 12.5 % in Pakistan, then Pakhtunkhwa should be getting 427 Million Dollars. (According to older calculations 103 Million dollars). Pakhtunkhwa government may then distribute requisite money to Karak according to an agreed formula.

[Talal]

I am not an outsider. I know how it works in Pakistan :-)

But you didnt consider this in your calculations..you went straight for the expenditures & profit thing..which actually really isnt the way these things are done..i mean think of it..do you think companies just punch in how much gas they're producing and times it by the price and calculate their profits ? no they dont

you gotta put in wages, losses due to natural disasters, not getting enough output i mean there are a million other factors..think of it this way if you were to take these calculations and present it infront of the company to make your case .. do you actually think all of this would even make sense ? no it wont .. I suggest if you really are concerned about this ( and i share your concern to an extent, provinces dont get the royalties they deserve ) you contact the HR department of these companies and then come forth with a calculated analysis...cuz we both know that neither you or I are capable of even putting out a remotely accurate figure for our respective arguments

Thank you for letting me know on this ... I don't understand concept of shares .... but don't the above add up to 140 % Is that possible?

That was my mistake i was in a rush and i wrote down the wrong percentage..Here are the correct figures

1. MOL 10%
2. OGDCL 30%
3. PPL 30%
4. POL 25%
5. GHPL 5%

I have a copy of 2008 SUI Gas Annual Report. Maybe they have put it on their website also but I haven't checked. It shows the average production capacity in MMCF/day for wells in Karak as follows:

Chanda Khuram, 7.14
Gurguri 35.5
Deli Mela 15.82
Makori 24.3

That's a total of 82.76 MMCF which according to the same calculations add to $ 3,421,531,783.2

This amount does not consider 4 Manzalai wells of the Tal block that you just mentioend ... which in January 2010 has increased capacity to 40MMCF (Check MOL website)

Bro sui supplies gas..how is this data relevant ?..and before in your earlier calculation you were considering just the zone 1 now your jumping all over the place..The point i made was that you included nashpa in your calculations of m3 gas being drilled out of there whereas clearly that field hasnt even started working yet..and these figures aren't the figures of the gas being drilled out of the respective fields..this is gas supplied to these areas(correct me if I am wrong by pointing out the source where you got this from)

Again i have to argue how your calculating all these expenditures and net profits from a simple calculation while not considering or heck even knowing the actual profits and expenditures..while I agree again that provinces dont get what they should be getting ideally, i dont agree at all with the way your swinging the figures off the top of your head..it doesnt matter how much gas is being drilled out of these areas..royalties are given based on a fixed percentage from the net profit of these areas..and like i said if your actually concerned about this contact the HR department of these companies and get the respective values and then object to the unfairness..since that really is the only authentic way of proving anything

Back in April 2010, the Lahore High Court ordered OGDCL to pay Bugti Jr. (who shares same name with you) 506 Million royalty (5.8 Million Dollars) Pakistan News Service - PakTribune

The money should not have been backed up if it is his entitled right.

This just shows that award of loyalty "IN PAKISTAN" is not a simple game of percentages ... It is a weapon used for playing politics.

Actually they did pay it, they paid it to the balochistan government and Not to the bugtis they made no claim for it hence there was no issue..once they made the claim, went through a judicial process..they got what their right was..and that is the Pakistan i live in where atleast there is a judicial system and one that isnt defunct


It is already clear to me. Karak is not getting what it deserves. 3 Million is NOTHING.

Edit: If provinces get 12.5 % in Pakistan, then Pakhtunkhwa should be getting 427 Million Dollars. (According to older calculations 103 Million dollars). Pakhtunkhwa government may then distribute requisite money to Karak according to an agreed formula.[/QUOTE]

no where in this report does it talk about the royalties given to the provinces..that is another topic all together and like i said provinces should be given much more but that is another topic..your objection was specifically to the royalties given to karak district and well here were are

[Omar Usman]

Lol ... are you always in a rush?

Bro sui supplies gas..how is this data relevant ?..and before in your earlier calculation you were considering just the zone 1 now your jumping all over the place..The point i made was that you included nashpa in your calculations of m3 gas being drilled out of there whereas clearly that field hasnt even started working yet..and these figures aren't the figures of the gas being drilled out of the respective fields..this is gas supplied to these areas(correct me if I am wrong by pointing out the source where you got this from)

Who says Sui gas (you are referring to SNGPL/SSGPL) "supplies" gas. True tThey are not the drillers but they are responsible for building the gas pipeline network throughout Pakistan, in addition to providing gas to domestic and industries.

The source is http://sngpl.com.pk/index2.jsp?pgids...rtuyh709123465

The figures are for province wise gas received from "SOURCES". And maybe you are not familiar with geography, but Chanda, Gurguri, Mela and Makroi are all in Karak District/Tehsil. and of course, there are more wells that are NOW going to be operational and will probably be a couple of 100 Million dollars more generated from Pakhtunkhwa in return for the same 3 Million dollars.

I have to argue how your calculating all these expenditures and net profits from a simple calculation while not considering or heck even knowing the actual profits and expenditures..

Please read my 1st post. When I gave the quote, I did say that I have no idea how to deduct operational and running costs from this figure. No matter what calculations you do and what figure you receive, the figure of 3 Million Dollars is NOTHING next to the income from these wells. This has been stated by me 2 times earlier, and once in this post. And that is my whole point. Please remember this :-)

and like i said if your actually concerned about this contact the HR department of these companies and get the respective values and then object to the unfairness

HR Department? You must be joking right? Why don't you come with me and we can go together? It will be a nice day out. The food would be on you anyway since it's your idea.

like i said provinces should be given much more but that is another topic.

Glad you agree. That was my point.

[Omar Usman]

If SUI Gas is claiming receiving 82.76 MMCF, and the drillers are claiming far less being produced, don't you think that the "share-holders" you mentioned are STEALING GAS?

[Talal]

^ a day out to the fields would be nice but I am too far away from the homeland to make good on that commitment, and it's you who has a problem with figures not me.. Anyways sadly there is nothing left in the argument that is worth arguing..the way your calculating things is far too simplified to the extent that it belies any knowledge whatsoever of the way the business is actually done..and since I don't know either that leaves us again with just the facts, facts being what was originally reported

I am not always in a hurry, usually it's just not worth it to waste my time