Mari gas company limited


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Mari gas company limited

  1. 1. Mari Gas Company LimitedCOMPANY OVERVIEW:Mari Gas Company Limited is one of the largest oil & gas exploration and productioncompanies in Pakistan.Mari Gas Field, located at Daharki, District Ghotki, Sindh, approximately 96 kilometersNorth of Sukkur. Esso Eastern Inc (EEI) discovered this field in 1957 with initial gasreserve estimate of 3TCF. Over the years with the phased development of the Field andthe subsequent reservoir evaluations the Field reserves size enhanced to 6.8TCF, thusmaking Mari the country’s 2nd largest gas field. The field was brought on production in1967 when the required infrastructure was established to supply 30 MMSCF/Day gas tofertilizer plant of Esso Pakistan Fertilizer Company Limited – now Engro ChemicalPakistan Limited.Mari Gas Field was owned by Pak Stanvac Petroleum Project (PSPP), a joint venturebetween Government of Pakistan as 49% interest owner and EEI as 51% interest ownerand operator with marketing rights over entire production from the field. The field wasoperated under this arrangement till 1983 when Fauji Foundation acquired the entire 51%interest of EEI in PSPP along with its branch office and operated the field till December22, 1985. Fauji Foundation, Government of Pakistan and Oil and Gas DevelopmentCorporation (now Oil and Gas Development Company Limited) incorporated Mari GasCompany Ltd as an unlisted public limited company on December 04, 1984 to takeoverthe assets, liabilities and operation of Fauji Foundation (Mari Gas) and Pak StanvacPetroleum Project. The Company commenced business in its own name on December 23,1985.BUSINESS DESCRIPTION:Mari Gas Company Limited (MGCL) is a Pakistan-based. The Company is principallyengaged in drilling, exploration, production and sale of natural gas. As of June 30, 2010,the operated blocks, in which the Company had working interest included Ziarat, Karak,Sukkur, Hanna, Harnai, Hala, Kohlu, Kalchas, Sujawal, Kohat and Bannu West, and itsnon-operated blocks included Dhadar, Oman 43B and Yemen block 29. Ticker MARI Country PAKISTAN Exchanges KAR Major Industry Oil, Gas, Coal & Related Services Sub Industry Miscellaneous Oil, Gas and Coal 2010 Sales 5,240,117,000 Employees 371 Currency Pakistan Rupees Fiscal Year Ends June Shares Outstanding 73,500,000 Market Capital 8,232,000,000 Share Type Ordinary Closely Held Shares 58,820,800 1
  2. 2. Mari Gas Company LimitedCORPORATE STRUCTURE:Mari Gas Company is registered as a public limited company, listed and traded on allthree stock exchanges of Pakistan. The company has an authorized capital of Pak Rs.2,500 million and paid up capital of Pak Rs. 735.00 million which is subscribed by FaujiFoundation (40% with management control), Government of Pakistan (20%), Oil andGas Development Company limited (20%) and the General Public (20%).The company is managed by a board of fourteen directors representing: Fauji Foundation 6 Government of Pakistan 3 OGDCL 3 General Public 2The directors representing Fauji Foundation and General Public are elected by theshareholders for a term of three years.PRODUCTION & CUSTOMERS:The production facilities managed by the company, consists of ninety eight (98)producing wells and a network of about 300 kilometers gas-gathering lines connectingthe wells to two central manifolds. The Mari Field is capable of producing 600MMSCFD of gas, which is being allocated to the following customers. Gas AllocationCustomers (MMSCFD)Engro Chemicals Pakistan Ltd 103.00Fauji Fertilizer Company Ltd Mirpur Mathello 95.50Fauji Fertilizer Company Ltd Goth Machhi 184.00Water and Power Development Authority 110.00Sui Southern Gas Company Ltd 1.60Foundation Power Company Daharki Ltd 65.00Star Power Company Ltd 44.00Total 603.1NEW PROJECTS:Development of Zarghun Gas Field:The Company has recently executed the Gas Sales Agreement with the SSGC, a state rungas transmission company, to supply about 25MMSCFD gas from its under developmentfield ‘Zarghun South Field’. Besides drilling a development well, the field developmentwork includes; construction of gas processing facilities, gas gathering system and lying ofa 65km gas export pipeline. The project having estimated capital outlay of around US$40 2
  3. 3. Mari Gas Company Limitedmillion is expected to commence commercial production during the first half of year2010.NEW DISCOVERIES: • Gas discovered in Sujawal Block, Sindh • Discovery in the Sukkur Exploration Block • Discovery in Mari Lease Area • Discovery in BalochistanINFORMATION TECHNOLOGY & ISO CERTIFICATION:Energy Update that with a business focus approach, MGCL is using InformationTechnology and ISO standards framework into the structure and culture of the company.This methodology is helping them to enhance their production, efficiency and strengthentheir abilities in exploring and materializing new opportunities.In order to manage non-structured data and automatic work flows, Enterprise ContentManagement (ECM) System has been installed in all the computer systems of thecountry. The system helps to reduce physical movement of the files and approvals aredone through the introduction of digital signatures. While providing faster access torequired information, the system has introduced a more collaborative environment.To improve efficiency and streamline business processes, the implementation of SAPsystem is in the process. This Enterprise Resource System (ERS) System will enable ourstaff and management to quickly gather and analyze financial and operational data fortimely decision making.MGCL have successfully acquired and maintained ISO 9001, 2008 for QualityManagement System; ISO 14001, 2004 for Environment Management Systems; ISO18001, 2007 for Occupational Health and Safety Management System.CORPORATE SOCIAL RESPONSIBILITY:MGCL’s CSR Approach: “Carry out sustainable development in our leased areas to meet the present needs of local community without undermining the capacity of their future generations to meet their own needs”Corporate Social Responsibility (CSR) in any company shows its strategic anddiversified vision towards its employees and society. At MGCL it is believed that CSR isabout the integration of social, environmental, and economic considerations into thedecision-making structures and processes of business. Mari Gas being one of the largestExploration and Production Company in Pakistan is conscious of its obligations towardsthe society and the environment. They have a history of community involvement and cansay this with great pride that they had done a great job. There is potential in their 3
  4. 4. Mari Gas Company Limitedorganization to reach new heights and they are prepared to exploit that potential. In doingso, they are cognizant of the fact that they must aim for balanced approach – theintegration of economic, environmental, and social imperatives.Recognizing the importance of CSR has lead MGCL to develop new partnerships, newsphere of existing partnerships, skill acquisitions, health and environment protection,social cohesion, and equal opportunities.COMMUNITY DEVELOPMENT PROGRAM:Mari Gas Company Limited aims at passing on the benefits of technology and modernindustrial setups to the community. With every new dawn, the company is exploring arange of untapped opportunities with focus on improving the quality of life of localcommunities.MGCL is making a sincere effort to involve local people in development projects,focusing on capacity building rather than traditional donor-beneficiary relationships. Intheir community development approach, local people are always involved in planning,implementing and managing projects, ensures that their humanitarian aid truly meet theirneeds.Through needs assessment and baseline surveys, MGCL has been able to tap into localresources and enhance their capacity. By improving the community’s quality of lifethrough this direct interface, MGCL aims to leave a lasting footprint in a sustainablemanner.HEALTH FOCUS:MGCL is undertaking a number of healthcare projects in its operational area for the poorcommunity in the vicinity including:Mobile Dispensaries:The project was launched in 1987 and is providing quality healthcare facilities to themost deprived area of the region since last 20 years with a mission: • To provide medical treatment to the poverty stricken community. • To create health and hygienic awareness in the community. • To educate about the potential hazards of communicable disease and their preventive measures. • To educate about rehabilitation of physically impaired children.Over 100,000 patients are being treated annually through Mobile Dispensary andCompany is spending over Rs. 10.5 Million per annum on this Project.Maternity Home: 4
  5. 5. Mari Gas Company LimitedRealizing an acute need of medical facilities for female patients. MGCL launched theMaternity Home Project in the Village Dad Leghari. A fully equipped and furnishedfacility was constructed in 1992. The ambit of responsibilities at the Maternity Homeincludes: • To offer free of cost treatment to female patients for Obs. Gynae related problems. • To immunize newborn babies against communicable diseases. • To conduct normal deliveries and DNCs in hygienic conditions. • Monthly turnover is about 1300 patients. • Over a Million Rupees per year is being spent to run this facility.Mari Medical Trust For Tuberculosis (TB):While social welfare considerations have been a top priority to the company, thecompany employees are also playing their due individual role to alleviate the sufferingsof the community. On observing a large number of patients in the community sufferingfrom Tuberculosis (T.B) the MGCL employees waged a war against this highlyinfectious disease at their own level and set up ‘MARI MEDICAL TRUST’ in 1997 withan aim: • To create awareness in the community about the deadly disease • To educate about the preventive measures for the abolition of T.B. • To develop resources within the society. • Since its inception over Rs. 3.5 Million has been spent so far by this Trust.Mass Vaccination Against Hepatitis-B:Hepatitis-B has been one of the major causes of mortality in the community. Initialsurvey has indicated that about 20-25% of the population is infected with this deadlydisease. MGCL management acted promptly to save the situation from turning intoepidemic and has launched a comprehensive campaign against the disease with anobjective to: • Preventive vaccination to none infected community members.The Campaign is divided in four phases of which three phases have been completed and4th phase in progress. • Total 78,000 patients have been vaccinated in three phases. • Rs. 60 Million would be spent in four phases.Constructed Field Dispensary In Mari Gas Field: 5
  6. 6. Mari Gas Company LimitedThe Company built a fully equipped and furnished dispensary in the field with a capitalcost of Rs. 1.5 Million and dispensary is being operated by Company doctors.Mother & Child Health Care Centre:In 2007, the Company built a 20 bedded fully equipped and furnished Mother and Childhealthcare hospital in Mirpur Mathelo with a capital cost of Rs. 12.5 Million. The centerhas been handed over to the Local District Government Ghotki as a commitment fromMGCL to the locals.NEW EXPLORATION BLOCKS:Notwithstanding the inhibitions of inhospitable terrain where MGCL have acquiredexploration blocks, MGCL remains committed to carrying out its social welfareprogrammes in coordination with local Governments. After carrying out survey ofvarious blocks, the main focus of their development activities remains on provision ofclean drinking water, improvement of existing health and education facilities. Some oftheir projects have already been completed and others are in the pipeline. These projectsare handed over to the District Government after completion as per Government policy.In tandem with progress of their exploration activities, their new blocks in Balochistanand Sindh remain the focus of their CSR programmes despite many limitations. Salientfeatures of their major CSR activities are:- 6
  7. 7. Mari Gas Company LimitedCompleted Projects Status(1) Ziarat Kach water supply scheme Handed over to PHE Department. (Ziarat Block, District Harnai)(2) Construction of Boys Primary School at Handed over to EducationDilwani Department GOB (Zarghun, District Harnai)(3) Construction of lined water channel at Dilwani The Project was near completion but it was badly damaged due to flashfloods. Ongoing Projects Status(1) Renovation/Provision of furniture etc to BoysHigh School Khost (Ziarat Block, District Harnai)(2) Renovation of Jamia Masjid Khost (Ziarat All these projects are nearingBlock) completion(3) Repair of Dispensary at Khost(4) Repair and widening of Track to villageDilwani Future ProjectsNecessary coordination is being carried out with District Governments for planning ofnew projects which include improvement of existing facilities as well as newprojects.Some of the projects which have been identified so far are:- 1. Extension of Ziarat Kach water supply scheme (Ziarat Block, District Harnai). 2. Improvement of Health and Education facilities in Hanna and Harnai Blocks (District Harnai). 3. Improvement of facilities at School for Special Children, District Shikarpur (Sukkur Block). 4. Renovation of Boys Primary School Ghot Ali Gohar Shar (Sukkur Block, District Shikarpur). 5. Renovation of Mosque at Ghari Syed (Sukkur Block).MARI D & P LEASE AREA:MGCL has no commitment to carryout social work programmes in Mari D&P lease area.However, as a responsible corporate entity, sustainable development of the areas whereMGCL works as an operator is embedded in its exploration and operational activities. ItsCSR budget for Mari D&P has been almost doubled for next fiscal year. MGCL has evenventured out to collaborate with its sister Companies and other nationally recognizedphilanthropists in the field. The salient aspects of CSR programmes through collaborationare:- 7
  8. 8. Mari Gas Company Limited • Establishment of Technical Training Centre (TTC) At Dahraki • Collaboration with Qarshi for Herbal Treatment of Hepatitis-B positive cases • Assistance to Other Organizations.DISASTER RELIEF:Our nation has been beset by natural disasters of massive scale in the last few years.MGCL and its employees contributed generously during earthquakes in AzadKashmir/NWFP in 2005 and in Balochistan in 2008. Their employees voluntarily reachedin calamity hit areas during earthquakes and personally supervised erection of shelters,provision of medicines and relief goods. MGCL and its employees once again rose to theoccasion and provided much needed relief goods to the IDPs camps established due to thesecurity situation in Swat and Buner Districts.ENCOURAGING SPORTS: • MGCL extended financial assistance of Rs. 1 Million to Tennis Federation of Pakistan. • Ms. Sara Mehboob Pakistan Women Tennis No.1 player was sponsored by Mari Gas Company to participate in ITF World Junior Championship in UAE from 16th to 31st Jan 2009.EDUCATION FOCUS:MGCL strongly believes in contributing towards improving the literacy rate of thepoverty stricken community. This effort can be best being seen in the significantcontribution made towards basic education at Mari Field Community. Following are theprojects undertaken: • Middle school at Kherohi. • Primary school near well no.8 & 55. • Primary school at Suria Badshah and kaloo Buriro • Madrassas & Industrial home for females at Kherohi. • Miscellaneous donations, laboratory equipments, furniture in the vicinity of MGCL fieldFemale Vocational Center: 8
  9. 9. Mari Gas Company LimitedMGCL is supporting economic empowerment local female community through variousincome generation activities, as part of these activities; MGCL has set up a vocationalcenter which aims to train the area by promoting and enhancing their existing skills inproducing traditional craft.INFRASTRUCTURE FOCUS:Communication Network:Mari Field area lies within the vicinity of a desert region and there was no roadinfrastructure. The company has constructed an excellent road network, comprising of: • 57 Km metalled road. • 308 Km dirt road. • Construction of 13 bridges over canals. • Total Capital Expense since inception: Rs. 325 Million • Total Maintenance & operating expense per year: Rs. 14 Million. • A better road network also proved to be a bonus for the local farmers.Supply of Potable Water:The scarcity of drinking water in the desert area of the Mari Field has been a source ofgreat inconvenience for the local inhabitants. Company has installed a hand pumps andconstructed overhead water tanks which are filled through water tankers to supply thepotable water for the community members.HEALTH SAFETY & ENVIRONMENT:Mari Gas Company Limited is committed to undertake all its business with a view tominimize potential Health, Safety & Environmental risk to its employees, environment,contractors, customers, neighbors, communities, stakeholders, others affected by itsactivities and the public at large.Policy Statement:The Company will develop, implement and maintain effective HSE management systemsfor health, safety and environment that are consistent with internationally recognizedstandards and enable it to: • Prevent accidents and provide a secure working environment by safeguarding the Company, its assets and property, and operations against risk of injury, loss or damage. 9
  10. 10. Mari Gas Company Limited • Take all reasonable precautions to control and prevent pollution or damage to the environment and surroundings. • Executing all operations in a proper, prudent manner in accordance with good oilfields practices. • Have commitment for continual improvement in HSE performance and ensure efficient use of natural resources. • Discourage actions inflicting any potential HSE risk. • Have commitment to adopt relevant legislations and meet other requirements and comply with statutory obligations.To implement this policy, MGCL will: • Identify and mitigate the HSE hazards stemming from its operations, especially prevention of spills, wastes and emissions. • Conduct environmental operational audit to optimize its performance. • Encourage and reward timely identification and reporting of risks. • Impart regular HSE training to increase the level of awareness amongst the employees. • Develop Company-wide control protocols for potentially fatal risks in the business and implementing a fatal incident management procedure. • Continue to drive improvement through effective safety leadership, line accountability, and behavioral change and awareness programs.HSE related issues will be mainly looked after by the HSE department of the Companyand all the issues will be promptly brought to the notice of the management. The policy isto be implemented via detailed management standards and standard operating procedures,the requirements of which must be met at all operations.FINANCIALS:The authorized share capital of the Company is Rs. 2,500,000,000 divided into250,000,000 shares of Rs.10 each. AmountShareholder %age (Rupees in Million)Fauji Foundation 40% 294.00Government of Pakistan 18.2% 133.77OGDCL 20% 147.00General Public 21.8% 160.23Total 100% 735.00Under the terms of Participation and Shareholders Agreement, the original Shareholdersi.e. Fauji Foundation, GOP and OGDCL have the pre-emption right to purchase theshares if offered for sale by any of the three parties. 10
  11. 11. Mari Gas Company LimitedReturn to the Shareholders:The guaranteed return to the shareholders of the Company has been increased from22.5% per annum to 30% per annum with effect from July 01, 2001. The shareholders arealso entitled to further increase in return on incremental gas production from the presentlevel to 425 MMSCFD (at the rate of 1% for every 20 MMSCFD of gas or equivalent oilproduced , prorated for part thereof on annual basis) subject to maximum of 45% perannumGas Pricing:Price of the gas produced from Mari Gas Field is determined by the Price DeterminingAuthority of the Government under the provisions of Mari Gas Wellhead PriceAgreement. The gas price formula under the agreement allows the Company:- • Operating expenses as approved by the Board of Directors in the annual plan and budget. • Exploration expenses upto US$ 20.00 million per annum or 30% of the gross sales revenue, whichever is less. • 30.0% return on defined shareholders funds - guaranteed to increase by 1% for every additional 20 MMSCF/Day of gas produced beyond 425 MMSCF/D, upto a maximum of 45%. • Repayment of borrowing for development project financingThe formula thus provides the profitability at a fixed level and ensures the financialliquidity of the Company.Contribution to National Economy:The Company has made significant contribution in the country’s development byproviding raw material to the fertilizer industry and supplying gas to WAPDA for powergeneration. Contribution to the national exchequer is to the tune of over Rs.12.00 billionper annum. On a regional level, the Company has not only provided jobs to the localpopulation but also created infrastructure in its areas of operations, which hassignificantly helped in local development.In an area of worst energy crisis in the history of Pakistan, MGCL proudly enjoying thematchless record of providing uninterrupted gas supply to the national energy mix sincelast 43 years. One of the largest oil & gas exploration & production companies inPakistan, the MGCL is shouldering the national burden to produce 11.6 % of the total gasproduction of the country.GRAPH SHOWING PRICE, EARNINGS AND DIVIDENDS OFMGCL 11
  12. 12. Mari Gas Company LimitedSWOT ANALYSIS OF MGCL:Strenght: • Integrated Management System (IMS) policy. • Strong portfolio of assets.Weakness: • Declining market share in sector. • Dependency on third party distributors.Opportunities: • Development of Zarghun gas field. • Expansion into new geographical markets.Threats: • Intense competition. • Impact of financial crises on E&P investments.CONCLUSION:What is CSR? Who does it benefit? And why should companies engage in it?The CSR focuses on doing well for those who are affected by corporation’s actual line ofbusiness. The CSR looks at legal rights including human rights and build policies andpractices that enhance them.There are many incentives, socially and by incentives of corporation, in order to enhanceCSR in their working environment. Mostly corporations inherit the CSR culture usuallyfor personal image gains rather than out of generous behavior and actual consideration.But it we look at it on the other side, as long as good is being done for the community asa whole, it doesn’t matter what the actually purpose was for those steps taken. 12
  13. 13. Mari Gas Company LimitedCSR OF MGCL: MGCL is a Pakistan based oil and gas company. The companyhasaitsainterestsaina13ablocksalocatedainaPakistanaandaabroad.sOneaofatheaoperatedablocks are ZIARAT BLOCK, KARAK BLOCK, SUKKUR BLOCK etc.MGCLawasaincorporatedaonaDeca4rth,a1984awithashareaholdingabyatheaGOVTaofaPakistan,aFaujiafoundationaandaOilaandagasadevelopmentacompany.aMGCL has madea sincere effort by involving people in developing projects. They have set their programsand objectives in a sustainable manner such as: • Local social sector development based on community priorities, needs and requirements. • Community motivation, awareness and effective participation in development projects.Theacompanyahasaundertakenahealthcareaprojectsaasawellaandainatheamostadeprivedareaaofathearegionasinceathealasta20ayears.aItahasalaunched a maternity home projectinatheaVillageaDadaLeghariaconsidering the essential need of medical facilitiesforafemaleapatients.Notajustatheacompany,abutatheaemployeesaasawellaindividuallyaplayingatheiraroleaag-ainstatheahighlyainfectiousadiseaseai.eaTuberculosisa(TB)aat their own level and setupMARI MEDICAL TRUST. They have also made a 20 bedded fully equipped MOTHERAND CHILDERN HEALTH CARE CENTRE in Maripur.ItsanoteworthyahereathataMARIaGASaFIELDaliesawithinatheadesertaregionawhereath-ereawereanoainfrastructurearoad.aTheacompanyaalsoainstalledahandapumpaandaconstr-uctedaoverheadawateratanksatoaovercomeatheascarcityaof drinking water in the desertedarea.Mariagasahasaprovidedaaagreataamountaofasocialaserviceaandawelfareainasuchaareaswhichaareadeprived,aneverabeenaheardaofaoratakenaintoaconcernsafor most of thecompanies.aAreasaincludeaKherohi,aSuriaabadshah and kaloo buriro where schools arebeingabuiltaforachildren.aMGCL could have improved its image in other ways, buttheacompanyahasasilentlyaworkedahandainahandaonatheirasocialaresponsibilityabyahelpingapeopleainaneedaandasuffering,abyahelpingathemastandaonatheirafeet,atheyamakesureathatatheagenerationathatafollowsathemahasaallatheaopportunitiesaofafurtheradevel-pment.MGCLaalsoaacknowledgeathataalthoughatheiracompanyacanacauseaseriousapollution &socialaharmabutatheyaalsoaacknowledgeathatapreventingamisuse of their Oil andGasaproductionsaisainatheiralongatermastrategies interest and is therefore consistentwith theiraeconomicaobjective. They recognize that long term growth is best being builtonan ethical and responsible foundation.Inathealast,abyainvestingainaCSR,acompaniesaareainvestingainasustainabilitya& broader 13
  14. 14. Mari Gas Company Limitedeconomic,asocialaandaenvironmentalagoal, CSR remains a beaming light of success ofimprovingathearoleaofabusiness in society, but also an ongoing challenge to whichcompaniesamust remain vigilant especially in emerging markets. 14