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Natural gas

SNGPL Defers Allocation of Pipeline Capacity to UGDCL Amid Gas Rationing Concerns

Strategic Insights

— 1 min read

Amid a high-stakes tussle, Sui Northern Gas Pipelines Limited (SNGPL) has deferred the allocation of pipeline capacity to a third party for transportation of natural gas, only weeks after approving it. The decision was taken at a recent board of directors (BoD) meeting of the state-run company through a majority vote. This move comes as SNGPL quietly enforces rationing of natural gas even before the onset of winter. The company avoids public discussion, but officials privately admit that loadshedding is a way to contain unaccounted-for gas (UFG) losses.

Key Takeaways:

  • SNGPL has deferred the allocation of 35mmcfd pipeline capacity to UGDCL, despite earlier approval, citing a majority decision at a BoD meeting.
  • The company is enforcing gas rationing, supplying gas to residential and commercial consumers for only two to three hours a day, without public notice.
  • The rationing is a way to contain unaccounted-for gas (UFG) losses, with officials admitting that uninterrupted gas supply to domestic and commercial consumers is a national loss.
  • The Petroleum Division is processing a case to impose a captive gas levy on private-sector gas distribution, targeting UGDCL, to ensure a level playing field with state-owned suppliers.
  • Over 300mmcfd of cheaper local gas remains shut-in or curtailed under SNGPL's instructions to absorb expensive LNG imports under binding contracts.
  • The government has raised fixed monthly charges by 50pc from July 1, 2025, creating cash flow problems for local producers such as OGDCL, GHPL, and others.
  • OGDCL has publicly deplored the situation, reporting a significant impact on daily net production due to reduced gas intake from several fields.

Statistics:

  • 35mmcfd pipeline capacity was allocated to UGDCL
  • 25mmcfd on firm basis till 2033 and 10mmcfd on interruptible basis for six months
  • Over 300mmcfd of cheaper local gas remains shut-in or curtailed
  • 50pc increase in fixed monthly charges from July 1, 2025
  • Total fixed charges, including taxes, now stand at nearly Rs2,500
  • Significant reduction in gas intake from several fields, leading to a daily net production impact of:

+ 1,148 barrels of crude oil

+ 76mmcfd of gas

+ 55 tonnes of LPG

Sources:

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