New incentives provided for low BTU gas fields development – Alfalah Securities Limited

Karachi: The Ministry of Petroleum and Natural Resources has prepared a new low BTU gas policy 2011 aimed at encouraging the development of low BTU gas fields which would meet the growing gas demand of the country. According to the new policy, producers would be allowed to import at zero duty in order to encourage them to explore more gas fields. Currently, there are several gas fields in the country having an energy content of 450 BTU/SCF which are difficult to develop due to their high CO2 and other gases content.

According to Alfalah Securities Limited, these gas fields require huge investments to remove the CO2 content and to make its energy content at the same level with normal gas fields which would make it appropriate for power generation. The incentives being provided to explore gas fields to producers would enable them to supply 200mmcfd gas and would pave away the burden of imported energy. Features of the new low BTU gas fields policy states that the producers would be able to carry forward their operating losses for a period of not more than 15 years and would also be exempted from income tax for a minimum 10 years period while, the prices of low BTU gas of 450BTU/scf has been fixed at USD 6/MMBTU and would increase by USD 0.01/MMBTU for each reduction below 450BTU/scf to a level of 175 BTU/scf.

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