CSR OF MGCL

1. Mari Gas Company Limited
COMPANY OVERVIEW:
Mari Gas Company Limited is one of the largest oil & gas exploration and production
companies in Pakistan.
Mari Gas Field, located at Daharki, District Ghotki, Sindh, approximately 96 kilometers
North of Sukkur. Esso Eastern Inc (EEI) discovered this field in 1957 with initial gas
reserve estimate of 3TCF. Over the years with the phased development of the Field and
the subsequent reservoir evaluations the Field reserves size enhanced to 6.8TCF, thus
making Mari the country’s 2nd largest gas field. The field was brought on production in
1967 when the required infrastructure was established to supply 30 MMSCF/Day gas to
fertilizer plant of Esso Pakistan Fertilizer Company Limited – now Engro Chemical
Pakistan Limited.
Mari Gas Field was owned by Pak Stanvac Petroleum Project (PSPP), a joint venture
between Government of Pakistan as 49% interest owner and EEI as 51% interest owner
and operator with marketing rights over entire production from the field. The field was
operated 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 December
22, 1985. Fauji Foundation, Government of Pakistan and Oil and Gas Development
Corporation (now Oil and Gas Development Company Limited) incorporated Mari Gas
Company Ltd as an unlisted public limited company on December 04, 1984 to takeover
the assets, liabilities and operation of Fauji Foundation (Mari Gas) and Pak Stanvac
Petroleum 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 principally
engaged 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 its
non-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
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2. Mari Gas Company Limited
CORPORATE STRUCTURE:
Mari Gas Company is registered as a public limited company, listed and traded on all
three 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 Fauji
Foundation (40% with management control), Government of Pakistan (20%), Oil and
Gas 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 2
The directors representing Fauji Foundation and General Public are elected by the
shareholders 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 connecting
the wells to two central manifolds. The Mari Field is capable of producing 600
MMSCFD of gas, which is being allocated to the following customers.
Gas Allocation
Customers
(MMSCFD)
Engro Chemicals Pakistan Ltd 103.00
Fauji Fertilizer Company Ltd Mirpur Mathello 95.50
Fauji Fertilizer Company Ltd Goth Machhi 184.00
Water and Power Development Authority 110.00
Sui Southern Gas Company Ltd 1.60
Foundation Power Company Daharki Ltd 65.00
Star Power Company Ltd 44.00
Total 603.1
NEW PROJECTS:
Development of Zarghun Gas Field:
The Company has recently executed the Gas Sales Agreement with the SSGC, a state run
gas transmission company, to supply about 25MMSCFD gas from its under development
field ‘Zarghun South Field’. Besides drilling a development well, the field development
work includes; construction of gas processing facilities, gas gathering system and lying of
a 65km gas export pipeline. The project having estimated capital outlay of around US$40
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3. Mari Gas Company Limited
million is expected to commence commercial production during the first half of year
2010.
NEW DISCOVERIES:
• Gas discovered in Sujawal Block, Sindh
• Discovery in the Sukkur Exploration Block
• Discovery in Mari Lease Area
• Discovery in Balochistan
INFORMATION TECHNOLOGY & ISO CERTIFICATION:
Energy Update that with a business focus approach, MGCL is using Information
Technology and ISO standards framework into the structure and culture of the company.
This methodology is helping them to enhance their production, efficiency and strengthen
their abilities in exploring and materializing new opportunities.
In order to manage non-structured data and automatic work flows, Enterprise Content
Management (ECM) System has been installed in all the computer systems of the
country. The system helps to reduce physical movement of the files and approvals are
done through the introduction of digital signatures. While providing faster access to
required information, the system has introduced a more collaborative environment.
To improve efficiency and streamline business processes, the implementation of SAP
system is in the process. This Enterprise Resource System (ERS) System will enable our
staff and management to quickly gather and analyze financial and operational data for
timely decision making.
MGCL have successfully acquired and maintained ISO 9001, 2008 for Quality
Management System; ISO 14001, 2004 for Environment Management Systems; ISO
18001, 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 and
diversified vision towards its employees and society. At MGCL it is believed that CSR is
about the integration of social, environmental, and economic considerations into the
decision-making structures and processes of business. Mari Gas being one of the largest
Exploration and Production Company in Pakistan is conscious of its obligations towards
the society and the environment. They have a history of community involvement and can
say this with great pride that they had done a great job. There is potential in their
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4. Mari Gas Company Limited
organization to reach new heights and they are prepared to exploit that potential. In doing
so, they are cognizant of the fact that they must aim for balanced approach – the
integration of economic, environmental, and social imperatives.
Recognizing the importance of CSR has lead MGCL to develop new partnerships, new
sphere 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 modern
industrial setups to the community. With every new dawn, the company is exploring a
range of untapped opportunities with focus on improving the quality of life of local
communities.
MGCL is making a sincere effort to involve local people in development projects,
focusing on capacity building rather than traditional donor-beneficiary relationships. In
their community development approach, local people are always involved in planning,
implementing and managing projects, ensures that their humanitarian aid truly meet their
needs.
Through needs assessment and baseline surveys, MGCL has been able to tap into local
resources and enhance their capacity. By improving the community’s quality of life
through this direct interface, MGCL aims to leave a lasting footprint in a sustainable
manner.
HEALTH FOCUS:
MGCL is undertaking a number of healthcare projects in its operational area for the poor
community in the vicinity including:
Mobile Dispensaries:
The project was launched in 1987 and is providing quality healthcare facilities to the
most 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 and
Company is spending over Rs. 10.5 Million per annum on this Project.
Maternity Home:
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5. Mari Gas Company Limited
Realizing an acute need of medical facilities for female patients. MGCL launched the
Maternity Home Project in the Village Dad Leghari. A fully equipped and furnished
facility was constructed in 1992. The ambit of responsibilities at the Maternity Home
includes:
• 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, the
company employees are also playing their due individual role to alleviate the sufferings
of the community. On observing a large number of patients in the community suffering
from Tuberculosis (T.B) the MGCL employees waged a war against this highly
infectious disease at their own level and set up ‘MARI MEDICAL TRUST’ in 1997 with
an 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. Initial
survey has indicated that about 20-25% of the population is infected with this deadly
disease. MGCL management acted promptly to save the situation from turning into
epidemic and has launched a comprehensive campaign against the disease with an
objective to:
• Preventive vaccination to none infected community members.
The Campaign is divided in four phases of which three phases have been completed and
4th 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:
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6. Mari Gas Company Limited
The Company built a fully equipped and furnished dispensary in the field with a capital
cost 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 Child
healthcare hospital in Mirpur Mathelo with a capital cost of Rs. 12.5 Million. The center
has been handed over to the Local District Government Ghotki as a commitment from
MGCL to the locals.
NEW EXPLORATION BLOCKS:
Notwithstanding the inhibitions of inhospitable terrain where MGCL have acquired
exploration blocks, MGCL remains committed to carrying out its social welfare
programmes in coordination with local Governments. After carrying out survey of
various blocks, the main focus of their development activities remains on provision of
clean drinking water, improvement of existing health and education facilities. Some of
their projects have already been completed and others are in the pipeline. These projects
are handed over to the District Government after completion as per Government policy.
In tandem with progress of their exploration activities, their new blocks in Balochistan
and Sindh remain the focus of their CSR programmes despite many limitations. Salient
features of their major CSR activities are:-
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7. Mari Gas Company Limited
Completed 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 Education
Dilwani 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 Boys
High
School Khost (Ziarat Block, District Harnai)
(2) Renovation of Jamia Masjid Khost (Ziarat All these projects are nearing
Block) completion
(3) Repair of Dispensary at Khost
(4) Repair and widening of Track to village
Dilwani
Future Projects
Necessary coordination is being carried out with District Governments for planning of
new projects which include improvement of existing facilities as well as new
projects.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 where
MGCL works as an operator is embedded in its exploration and operational activities. Its
CSR budget for Mari D&P has been almost doubled for next fiscal year. MGCL has even
ventured out to collaborate with its sister Companies and other nationally recognized
philanthropists in the field. The salient aspects of CSR programmes through collaboration
are:-
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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 Azad
Kashmir/NWFP in 2005 and in Balochistan in 2008. Their employees voluntarily reached
in 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 the
occasion and provided much needed relief goods to the IDPs camps established due to the
security 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 the
poverty stricken community. This effort can be best being seen in the significant
contribution made towards basic education at Mari Field Community. Following are the
projects 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 field
Female Vocational Center:
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9. Mari Gas Company Limited
MGCL is supporting economic empowerment local female community through various
income generation activities, as part of these activities; MGCL has set up a vocational
center which aims to train the area by promoting and enhancing their existing skills in
producing traditional craft.
INFRASTRUCTURE FOCUS:
Communication Network:
Mari Field area lies within the vicinity of a desert region and there was no road
infrastructure. 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 of
great inconvenience for the local inhabitants. Company has installed a hand pumps and
constructed overhead water tanks which are filled through water tankers to supply the
potable water for the community members.
HEALTH SAFETY & ENVIRONMENT:
Mari Gas Company Limited is committed to undertake all its business with a view to
minimize potential Health, Safety & Environmental risk to its employees, environment,
contractors, customers, neighbors, communities, stakeholders, others affected by its
activities and the public at large.
Policy Statement:
The Company will develop, implement and maintain effective HSE management systems
for health, safety and environment that are consistent with internationally recognized
standards 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.
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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 Company
and all the issues will be promptly brought to the notice of the management. The policy is
to 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 into
250,000,000 shares of Rs.10 each.
Amount
Shareholder %age
(Rupees in Million)
Fauji Foundation 40% 294.00
Government of Pakistan 18.2% 133.77
OGDCL 20% 147.00
General Public 21.8% 160.23
Total 100% 735.00
Under the terms of Participation and Shareholders Agreement, the original Shareholders
i.e. Fauji Foundation, GOP and OGDCL have the pre-emption right to purchase the
shares if offered for sale by any of the three parties.
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11. Mari Gas Company Limited
Return to the Shareholders:
The guaranteed return to the shareholders of the Company has been increased from
22.5% per annum to 30% per annum with effect from July 01, 2001. The shareholders are
also entitled to further increase in return on incremental gas production from the present
level to 425 MMSCFD (at the rate of 1% for every 20 MMSCFD of gas or equivalent oil
produced , prorated for part thereof on annual basis) subject to maximum of 45% per
annum
Gas Pricing:
Price of the gas produced from Mari Gas Field is determined by the Price Determining
Authority of the Government under the provisions of Mari Gas Wellhead Price
Agreement. 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 financing
The formula thus provides the profitability at a fixed level and ensures the financial
liquidity of the Company.
Contribution to National Economy:
The Company has made significant contribution in the country’s development by
providing raw material to the fertilizer industry and supplying gas to WAPDA for power
generation. Contribution to the national exchequer is to the tune of over Rs.12.00 billion
per annum. On a regional level, the Company has not only provided jobs to the local
population but also created infrastructure in its areas of operations, which has
significantly helped in local development.
In an area of worst energy crisis in the history of Pakistan, MGCL proudly enjoying the
matchless record of providing uninterrupted gas supply to the national energy mix since
last 43 years. One of the largest oil & gas exploration & production companies in
Pakistan, the MGCL is shouldering the national burden to produce 11.6 % of the total gas
production of the country.
GRAPH SHOWING PRICE, EARNINGS AND DIVIDENDS OF
MGCL
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12. Mari Gas Company Limited
SWOT 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 of
business. The CSR looks at legal rights including human rights and build policies and
practices that enhance them.
There are many incentives, socially and by incentives of corporation, in order to enhance
CSR in their working environment. Mostly corporations inherit the CSR culture usually
for 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 as
a whole, it doesn’t matter what the actually purpose was for those steps taken.
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13. Mari Gas Company Limited
CSR OF MGCL: MGCL is a Pakistan based oil and gas company. The company
hasaitsainterestsaina13ablocksalocatedainaPakistanaandaabroad.sOneaofatheaoperateda
blocks are ZIARAT BLOCK, KARAK BLOCK, SUKKUR BLOCK etc.
MGCLawasaincorporatedaonaDeca4rth,a1984awithashareaholdingabyatheaGOVTaofa
Pakistan,aFaujiafoundationaandaOilaandagasadevelopmentacompany.aMGCL has made
a sincere effort by involving people in developing projects. They have set their programs
and 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.
Theacompanyahasaundertakenahealthcareaprojectsaasawellaandainatheamostadeprived
areaaofathearegionasinceathealasta20ayears.aItahasalaunched a maternity home project
inatheaVillageaDadaLeghariaconsidering the essential need of medical facilities
forafemaleapatients.
Notajustatheacompany,abutatheaemployeesaasawellaindividuallyaplayingatheiraroleaag-
ainstatheahighlyainfectiousadiseaseai.eaTuberculosisa(TB)aat their own level and setup
MARI MEDICAL TRUST. They have also made a 20 bedded fully equipped MOTHER
AND CHILDERN HEALTH CARE CENTRE in Maripur.
ItsanoteworthyahereathataMARIaGASaFIELDaliesawithinatheadesertaregionawhereath-
ereawereanoainfrastructurearoad.aTheacompanyaalsoainstalledahandapumpaandaconstr-
uctedaoverheadawateratanksatoaovercomeatheascarcityaof drinking water in the deserted
area.
Mariagasahasaprovidedaaagreataamountaofasocialaserviceaandawelfareainasuchaareas
whichaareadeprived,aneverabeenaheardaofaoratakenaintoaconcernsafor most of the
companies.aAreasaincludeaKherohi,aSuriaabadshah and kaloo buriro where schools are
beingabuiltaforachildren.aMGCL could have improved its image in other ways, but
theacompanyahasasilentlyaworkedahandainahandaonatheirasocialaresponsibilityabyahelp
ingapeopleainaneedaandasuffering,abyahelpingathemastandaonatheirafeet,atheyamake
sureathatatheagenerationathatafollowsathemahasaallatheaopportunitiesaofafurtheradevel-
pment.
MGCLaalsoaacknowledgeathataalthoughatheiracompanyacanacauseaseriousapollution &
socialaharmabutatheyaalsoaacknowledgeathatapreventingamisuse of their Oil and
Gasaproductionsaisainatheiralongatermastrategies interest and is therefore consistent
with theiraeconomicaobjective. They recognize that long term growth is best being built
on
an ethical and responsible foundation.
Inathealast,abyainvestingainaCSR,acompaniesaareainvestingainasustainabilitya& broader
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14. Mari Gas Company Limited
economic,asocialaandaenvironmentalagoal, CSR remains a beaming light of success of
improvingathearoleaofabusiness in society, but also an ongoing challenge to which
companiesamust remain vigilant especially in emerging markets.
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