Exploration, production policy: Ministry works out implementation framework

ISLAMABAD: In a strange development, the petroleum ministry has worked out an implementation framework, likely to be presented before the Executive Committee of the National Economic Council (ECNEC) on Friday, apparently for materialising the much-awaited amended Exploration and Production (E&P) policy, under which companies will be allowed to sell 35 per cent gas to private sector entities from new gas discoveries.

However, the 15 points suggested in the framework will serve nothing except for putting $5 billion investment in oil and gas sector in jeopardy.

On July 5, 2024, a delegation of domestic and foreign petroleum and gas exploration and production companies met Prime Minister Shehbaz Sharif in Islamabad and announced a substantial investment of $5 billion in Pakistan over the next three years. Expressing their confidence in Prime Minister Sharif’s leadership, the E&P companies committed to investing $5 billion to enhance Pakistan’s petroleum and gas exploration efforts.

The CCI, on January 26, 2024, approved the amended E&P policy, allowing E&P companies to sell 35pc gas from the new discoveries, but it had asked the Petroleum Division to submit implementation framework with the ECNEC for implementation of the changed policy. However, after seven months, the Petroleum Division has not been able to submit the timeframe to ECNEC for approval.

However, under the new scenario, the 15 points in the implementation framework suggested by the Petroleum Division are tantamount to foiling the amended policy, official sources at the Petroleum Division told The News. They said a framework being suggested is against the spirit of the above CCI decision and amendment and it would seriously discourage investors and damage their confidence in the policy regime of the country.

According to the draft of the timeframe to be presented before ECNEC, the petroleum ministry proposed that E&P companies would be allowed to offer to private sector companies up to 35pc in seven years in a phased manner meaning that in FY2024-25, up to 15pc will be allowed to sell to a third party (private party, in FY2025-26, up to 20pc, in FY2026-27, up to 25pc, in FY2027-28, up to 25pc, in FY2028-29, up to 25pc, in FY2029-30, up to 30pc in FY2030-31, up to 35pc and in FY2031 and onwards, up to 35pc gas will be sold out to private sector. The official sources said that this phased approach mechanism will never work and would only cause further resentment amongst the E&P professionals. The 35pc figure was approved by the CCI. The concept of a phased approach kills the whole intent objective and benefit of the proposed amendment. “This is just a stalling mechanism and the companies will not be able to benefit from the real objective that is recovery.”

When contacted, the Petroleum Division said the implementation framework had been completed, but it had to be seen and approved by the minister. After that, it would be presented before ECNEC. When asked if the ministry had suggested allowing the E&P companies to sell gas to private sector in seven years in a phased manner, one of the top officials said it was correct.