SUI NORTHERN GAS PIPELINES LIMITED

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Oct 1 - 7, 2012

Sui Northern Gas Pipelines Limited (SNGPL) is the largest integrated gas company serving more than 3.9 million consumers in North Central Pakistan through an extensive network in Punjab, Khyber Pakhtoon Khwa and Azad Jammu & Kashmir and is certified against ISO 14001:2004 & OHSAS 18001:2007 standards. SNGPL's 11 sites have been registered under the SMART2 program by Pakistan Environmental Protection Agency (PAK-EPA). SNGPL has over 48 years of experience in operation and maintenance of high-pressure gas transmission and distribution systems. It has also expanded its activities as Engineering, Procurement and Construction (EPC) contractor to undertake the planning, designing and construction of pipelines, both for itself and other organizations.

SNGPL FINANCIAL HIGHLIGHTS (Rs. in thousand)

INDICATORS MARCH 2012 (UN-AUDITED)
Non-current liabilities 70,097,529
Current liabilities 74,112,552
Non-current assets 91,630,774
Current assets 71,773,150

The Company took over the existing Sui-Multan system (217 miles of 16 inch and 80 miles of 10 inch diameter pipelines) from Pakistan Industrial Development Corporation (PIDC) and Dhlian-Rawalpindi-Wah system (82 miles of 6 inch diameter pipeline) from Attock Oil Company. The Company's commercial operations commenced by selling an average of 47 mmcfd gas in two regions viz. Multan and Rawalpindi, serving a total number of 67 consumers.

SNGPL transmission system extends from Sui in Baluchistan to Peshawar in Khyber Pakhtoon Khwa comprising over 7,613 km of transmission system. The distribution activities covering 2,205 main towns along with adjoining villages in Punjab & Khyber Pakhtoon Khwa are organized through 11 regional offices. Distribution system consists of 81,828 km of pipeline.

During the period ended on March 31, 2011, the company earned a net profit of Rs. 1,014 million as against Rs. 415 million during the corresponding period last year. The company's EPS has also increased to Rs. 1.76 (Re. 0.72, March 31, 2011). The increase in net profit and subsequent increase in earnings per share is the reflection of concerted efforts of the management. During the third quarter, due to adverse weather conditions, gas load management and shifting of gas supply from bulk to domestic sector, the company observed a slight increase in UFG loss.

SNGPL is also engaged in various pipeline construction projects for national and multinational companies. The relations with these companies have remained exemplary especially with M/s MOL Pakistan who after their first working interaction with the company at manzalai gas gathering system awarded the company with jobs of mamikhel-1 flow line, maramzai-l flow line, makori feed line, manzalai-8 flow line and recently makori east flow line. Besides this, MOL Pakistan has further desired to enter into five year contractual relationship with SNGPL. Their future projects include tolanj-1, mamikhel-2, manzalai-9, maramzai-2, manzalai-10, manzalai-11, mardankheil-1, manzalai-12, mardankheil-south etc. OGDCL awarded the Qadirpur compression project to the company last year. Recently OGDCL has awarded another pipeline project at its reti & maru gas field to SNGPL.

NATURAL GAS ANALYSIS

Natural gas is the second most commonly used fuel for residential/commercial purposes in developed countries, and by 2040 it will account for 30 per cent of their demand in the sector. Demand is expected to grow in every part of the world, but especially in the Non OECD countries in the Asia Pacific region, where demand for natural gas is expected to triple over the next 30 years. The Middle East also will see significant growth, while Russia/Caspian demand flattens.

China's natural gas demand growth will be split between the industrial sector and the residential/commercial sector, where distribution lines are being rapidly expanded and gas is very competitive versus liquefied petroleum gas (LPG). In

India, about half of the growth in natural gas demand through 2040 will come from the industrial sector. And, in the Middle East, gas demand is being driven by the need for electricity generation as well as industrial demand.

On the other hand, in Pakistan the analysis of the sectoral consumption of natural gas indicates that during July-March 2011-12, the consumption of gas in the cement sector was 1.4 billion cubic feet compared to 0.6 billion in the corresponding period during 2010-11 thus posting a positive growth of 133 per cent during the period. The Industrial sector experienced a decline in consumption of gas and posted a negative growth of 12.5 per cent during 2010-11. This sector also showed negative growth of 6.8 per cent during July-March 2011-12 when compared to the same period during 2010-11.

The transport sectors is the most significant sector in Pakistan; posting a positive growth in gas consumption of 14.2 per cent during 2010-11 as compared with 2009-10 and a positive growth of 10.8 per cent during July-March 2011-12 as compared with the same period during 2010-11. Like petroleum products in all the provinces of the country, the share of Punjab in the consumption of natural gas in 2010-11 was higher (53.2 %) followed by Sindh (35.3%). Balochistan and KPK respectively had smaller shares of 7.1 per cent and 4.4 per cent.

CONCLUSION

No doubt, SNGPL is the leading integrated natural gas provider in the region seeking to improve the quality of life of their customers and achieve maximum benefit. The company is committed to deliver natural gas to all doorsteps in their chosen areas through continuous expansion of their network, by optimally employing technological, human and organizational resources, best practices and high ethical standards.