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Saturday July 13, 2024

18-member panel to finalise plan to attract $5bn investment by E&P firms

Eommittee will also devise a strategy to cope with monster of circular debt in gas sector that has reached Rs2,900 billion

By Khalid Mustafa
July 08, 2024
Two employees work on a gas pipeline. — AFP/file
Two employees work on a gas pipeline. — AFP/file

ISLAMABAD: Prime Minister Shehbaz Sharif has constituted an 18-member high powered committee headed by Deputy Prime Minister Ishaq Dar to finalise the plan to attract $5 billion investment in the oil and gas sector by E&P (Exploration and Production) companies in three weeks.

The committee will also devise a strategy to cope with the monster of circular debt in gas sector that has reached Rs2,900 billion.

The committee would firm up a plan with short-term, medium-term and long-term actions to resolve issues being faced by the E&P Sector.

The committee would also propose steps for early operationalization of the amended Petroleum Policy 2012, and Tight Gas Policy, 2024. The implementation of amended E&P policy has been delayed by over 5 months, which also irked the SIFC Apex Committee.

The Petroleum Division during the caretaker regime had proposed that the E&P companies would sell 50 percent to the private sector and 50 percent to Sui Southern and Sui Northern, but gas companies in the meeting opposed it. However, CCI allowed the E&P companies to sell 35 percent of their gas production against the proposed 50 percent allocation.

The private sector will use the transmission and distribution system of Sui Gas companies to sell the gas to their clients. This initiative will help reduce the liquidity crisis of exploration and production companies.

The CEO of Universal Gas Distribution Company (UGDC), Ghyias Paracha, has lauded the decision of the prime minister positive. He said the private sector would give the E&P companies the amount in advance based on the bidding process and this is how the liquidity crisis of the E&P will improve a lot. So far Sui gas companies owe Rs1,500 billion to E&P companies therefore, they are not able to accelerate the E&P activities to discover oil and gas in the country. Paracha said that there is a dire need to implement the TPA rules in the oil and gas sector paving the way for the private sector to play an important role in this sector.

In the 18-member committee, the deputy prime minister would act as Convener. Federal Minister for Petroleum, Federal Minister for PD&SI, Federal Minister for Power, Federal Minister for Finance & Revenue, Federal Minister for Interior, and Federal Minister for Maritime Affairs would be the members of the committee. In addition, Secretary, Petroleum Division, Secretary, PD&SI Division, Secretary, Power Division, Secretary, Finance Division, Secretary, Interior Division, Secretary, Maritime Affairs Division, Chairman, FBR, Andrzej Kaczorowski, Managing Director, M/s Polish Oil & Gas Company, Ali Al-Temimi, Country Manager, Kirthar Pakistan B.V., Ahmad Hayat Lak, Managing Director/CEO, M/s Oil & Gas Development Company Ltd and Faheem Haider, Managing Director/CEO, M/s Mari Petroleum Company Ltd., would also act as members of the committee. Under the Terms of Reference, the committee would finalise the plan to i) resolve circular debt in the gas sector; ii. to avoid gas curtailment due to lack of integrated planning by firming up integrated energy plan; iii). to review fiscal regime for E&P sector and develop proposals to make it more conducive for investment; iv). framework for providing enhanced security in high-risk areas without entailing additional cost to E&P Sector, especially during exploration stage; v). to promote business friendly environment for E&P companies and investors; vi). to review contract related issues highlighted by E&P companies and suggest way forward; vii) proposal to attract investment in off-shore exploration viii. To propose steps for early operationalisation of Amended Petroleum Policy, 2012 and Tight Gas Policy, 2024; ix). to plan for full automation/digitization of oil/gas exploration concession/ licensing regime in Directorate General of Petroleum Concessions, providing online submissions, approvals and licencing based on international best practices of transparency and ease of doing business; x) to benchmark port charges for LNG cargoes against regional/international ports and suggest way forward; xi). to propose exploring possibility of encouraging/allowing private sector/third parties to import RLNG under long term contracts.