Jura Energy Corporation (Jura) reported Wednesday the commencement of commercial production from the Zarghun South gas field in the Zarghun South Block in Balochistan province, Pakistan.
Approximately 4 million standard cubic feet per day (MMcf/d), or 1.6 MMcf/d net to Jura, of gas from the field is being sold to Sui Southern Gas Company Limited (SSGCL) under an Interim Gas Sale Arrangement (the Interim Arrangement). This Interim Arrangement was approved by the Joint Venture partners pending the installation and commissioning of an Amine Sweetening Unit (ASU), used to remove carbon dioxide and hydrogen sulphide from the inlet gas stream. During this Interim Arrangement, a chemical scavenger is being used in place of the ASU. The gas sold during this interim period will be “off specification”, as this gas will not fully meet the specified composition standard agreed under the original Gas Sale Agreement with SSGCL. This Interim Arrangement will continue until the ASU becomes fully operational, which is expected to occur in October.
Approximately 80 percent of Zarghun South’s reserves are certified as “tight gas” under Pakistan’s Tight Gas (Exploration and Production) Policy, 2011. The tight gas is expected to be entitled to a price of $6.74 per million British thermal unit (MMBtu). Zarghun South gas has a heating value of approximately 900 Btu/Scf. Under the terms of the Interim Arrangement, the “off specification” gas will be sold at a discount of 30 percent to the price that would otherwise be applicable to the gas. Based on the expected gas price of $6.74 per MMBtu, management of Jura expects that monthly revenue (net of royalty of 12.5 percent of the value of petroleum and price discount of 30 percent) to Jura from the Zarghun South gas field during the interim period will be approximately $170,000.
The Zarghun South lease covers an area of approximately 47.8 square miles (124 square kilometers) in the western part of the Sulaiman Fold and Thrust Belt of the Middle Indus Basin. It is strategically located near the gas demand centre of the city of Quetta.
Jura holds a 40 percent working interest in the Zarghun South lease, which is operated by Mari Petroleum Company Limited.
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