Ghani Chemical Industries Limited (PSX: GCIL) has entered into a binding agreement with an unnamed third party to develop and operate gas processing facilities connected to the proposed purchase of raw sour gas from Oil and Gas Development Company Limited (OGDC) at the Jandran Field in Balochistan. The development follows a Letter of Intent issued by OGDC to the third party for the proposed purchase of raw sour gas from the Jandran Formation. The project is aimed at establishing the infrastructure required to process and commercially utilise gas resources from the field, although several technical, commercial and regulatory requirements must be completed before the project can move toward implementation.
According to a material disclosure submitted by Ghani Chemical to the Pakistan Stock Exchange on September 1, the proposed transaction remains subject to negotiations and the execution of a definitive Gas Sale and Purchase Agreement with OGDC. The parties will also need to complete the required technical and commercial arrangements before the project can proceed. In addition, the development will require relevant regulatory and government approvals and consents. The company has made clear that the current agreement and the Letter of Intent represent preliminary stages of the proposed project rather than the start of commercial operations.
Under the binding agreement signed with the third party, Ghani Chemical will take responsibility for the technical and financial execution of the proposed gas processing project. Its responsibilities are expected to include the development, installation, commissioning and operation of the processing facilities required for the project. The company’s role would therefore extend across key stages of the proposed development, from establishing the necessary infrastructure to operating the facilities once they become functional and all required conditions have been met.
The proposed project is also expected to cover several activities related to the commercialisation of gas from the Jandran Field. These include gas processing, transportation, marketing and sale of the processed gas. By establishing suitable processing infrastructure, the project is intended to enable the commercial use of resources available at the Jandran Field. The proposed arrangement could provide a framework under which the raw sour gas is processed and subsequently transported and marketed, subject to the completion of the relevant commercial and technical arrangements.
Ghani Chemical said the final structure of the project could involve the company directly or through a special purpose vehicle. The ownership and funding arrangements have not yet been finalised and will be determined through the company’s internal approval process. The final structure will require approval from Ghani Chemical’s board, meaning that the current agreement does not yet establish the final ownership or financing model for the project.
The company further stated that the proposed development remains subject to technical and commercial due diligence. The definitive agreements will need to be finalised and executed, while financing for the project must also become available before implementation can proceed. In addition, all necessary regulatory and government approvals and consents will have to be obtained. These conditions remain important steps before Ghani Chemical can move from the preliminary agreement stage toward actual project development.
Ghani Chemical has also clarified that the Letter of Intent issued by OGDC and the binding agreement with the third party should not be considered a guarantee of future revenues or profitability. The company said these arrangements do not constitute the commencement of commercial operations. The project will only advance further once the required technical assessments, commercial negotiations, agreements, financing arrangements and regulatory processes have been completed.
The company is expected to provide additional disclosures as material developments take place. These developments may include the execution of the definitive Gas Sale and Purchase Agreement with OGDC, approval of the final project structure, financial close and the formal commencement of project implementation. Until those milestones are achieved, the proposed gas processing project remains subject to the conditions and approvals outlined by Ghani Chemical.
The development comes as the company explores opportunities linked to the commercial utilisation of gas resources through dedicated processing infrastructure. If the required agreements, financing and approvals are completed, Ghani Chemical would be responsible for a broad range of activities covering the development and operation of the proposed facilities as well as processing, transportation, marketing and sale of gas. For now, however, the company has emphasised that the project remains at a preliminary stage and that further progress will depend on the completion of the outstanding technical, commercial, financial and regulatory requirements.
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