Oil exploration companies reject duty on machinery import

The oil and gas exploration and production (E&P) companies have rejected 5 percent duty on import of machinery, and demanded of the government that it should withdraw the decision to provide them conducive environment for work, it is learnt.
The E&P companies that imposition of duty on import of drilling and exploration machinery was increasing the cost of exploration and its continuation in the long run would make it less attractive against other countries.
Sources said that E&P companies'' representative body, Exploration and Production Companies Association (EPCA), has taken the issue at various levels and has demanded withdrawal of the duty, but its demand has not yet been accepted.
Sources said that duty on import of all kinds of exploration and production machinery and other items is more biting to the foreign oil companies and they want its withdrawal without any delay.
The degree of their agony could be gauged from the letter written to the government by Shell, Pakistan, some time back. The company, which is engaged in exploration, production and marketing of petroleum products in Pakistan, said in its letter that imposition of duty was totally unacceptable to it.
According to sources, Shell said that instead of paying duty on import of machinery, which would increase cost of work, it would like to stay away from any kind of exploratory work in Pakistan.
Sources said that other foreign oil and gas exploration and production companies also have the same views and they want withdrawal of the duty forthwith.
Sources said that these companies had shown resentment over EPCA''s indifference towards the issue and asked it to take strong view to force the government to take back its decision. These companies refer to other countries where such duty is non-existent. A number of big foreign companies are carrying out activities in Pakistan''s oil and gas sector. Many of them are carrying out exploration and production activities in other countries where they claim they are being given better facilities than Pakistan.
Other than foreign companies, local private sector and public sector companies are also playing their role in exploration of Pakistan''s natural resources.