The government is considering a Rs. 46 billion security plan to protect gas pipelines and oil and gas exploration activities in Khyber Pakhtunkhwa and Balochistan through 14 dedicated security wings.

The proposal comes after around 23 sabotage incidents over the last two years involving the Shewa and Bettani pipelines and the main northern network of Sui Northern Gas Pipelines Limited (SNGPL).

The attacks resulted in an estimated loss of 7,624 million cubic feet of gas, equivalent to around 25 LNG cargoes. The resulting financial loss was estimated at Rs. 12.7 billion based on a local gas price of $6 per million British thermal units (mmBtu), and Rs. 27.7 billion using an RLNG price of $13 per mmBtu.

The government estimates that a complete disruption of northern gas supplies would increase SNGPL’s dependence on costly RLNG and add Rs. 97 billion to its annual revenue requirement.

This could increase the prescribed gas price by around Rs. 333 per mmBtu, from Rs. 1,719 to Rs. 2,052 per mmBtu during the current financial year.

SNGPL’s northern system currently receives around 556 million cubic feet per day (mmcfd) from indigenous sources. These include supplies from recent discoveries at Mami Khel, Shewa and Spinwam in the Waziristan Block, Bettani under the Wali Exploration Licence and Koi Palak in the Baska North Block.

The proposed security system has two parts.

Four dedicated wings would be responsible for protecting SNGPL pipelines and northern gas sources. Their establishment is estimated at Rs. 12 billion, with recurring annual costs of Rs. 4 billion.

Two of these wings are already deployed, leaving an estimated requirement of Rs. 8.969 billion for two additional wings. Their annual recurring cost is estimated at Rs. 2 billion.

The government is also proposing 10 regular security wings under a CPEC-style security arrangement for oil and gas exploration and production activities, including exploration sites, drilling operations, wellheads and processing facilities.

Four of these wings would be deployed in Khyber Pakhtunkhwa and six in Balochistan.

The establishment cost of these 10 wings is estimated at Rs. 30 billion, including Rs. 12 billion for Khyber Pakhtunkhwa and Rs. 18 billion for Balochistan.

The government has proposed that the Rs. 30 billion establishment cost be shared equally by exploration and production companies, the federal government and the respective provincial governments. Each party would contribute Rs. 10 billion.

The annual recurring cost of Rs. 10 billion would be fully covered by E&P companies. Under the proposal, this cost would not involve financing charges or be passed on to consumers through gas prices.

Existing arrangements include around 1,513 personnel deployed to protect SNGPL pipelines at an annual cost of approximately Rs. 3 billion.

E&P companies have also deployed around 1,828 security personnel, costing about Rs. 2.174 billion annually.