The Director General Petroleum Concession (GDPC) has refused to give an extension of five years to Pakistan Petroleum Limited (PPL) of Sui Block''s lease, it is learnt. According to sources in the Ministry of Petroleum and Natural Resources the company discovered gas in Sui area of Dera Bugti, Balochistan in 1952 and has completed 60 years, the company sent a request to the GDPC for an extension of five years in the lease but the office refused.
After the refusal of the regulator the Ministry of Petroleum has constituted a committee to resolve the matter amicably as the Sui field has still significant gas reservoirs which at the time of discovery had an estimated 12 Trillion Cubic Feet (TCF) of natural gas reserves. The field at present is gradually depleting but still daily gas production stands at 418 Million Cubic Feet per Day (MMCFD).
After the passage of 18th constitutional amendment, the government through the Council of Common Interests (CCI) in 2013 decided to limit the production price of gas for the exploration and production companies operating under the 2007 and 2009 Petroleum Policies to $3.26 and $3.49 per million British Thermal Units.
"The amount of fresh claims of past work programmes stand at between $1.6bn and $2bn. This appeared to be a jackpot for the petroleum companies without any change in their committed work programme but an eye opener for the ministries of finance and petroleum. Now this issue has been addressed and all the provinces are agreed," an official of the Petroleum Ministry said.
Keeping in view the aforementioned problem the government decided to amend the Petroleum Policy 2013 and put a caveat: a limit on increase in the gas price as an incentive. The petroleum policy of 2012 offered an attractive production price of $6.3-6.5 per million BTU to new investors to attract them towards exploration and development activities. The policy also allowed the operators working under the previous policies the same rate to treat them on par with fresh investors and encourage them to produce more gas by signing supplementary contracts.
"We have no need to announce any new policy and will try to implement all these policies with minimum changes so that people start taking it seriously and invest instead of staying undecided," a senior Petroleum Ministry official said. He added that the government is to offer 16 more oil/gas concessional blocks to the E&P companies within coming weeks subject to the issuance of no objection certificates by the Ministry of Interior and Defence.
Private companies operating under the previous two policies, however, started filing fresh claims with DGPC of the Petroleum Ministry to convert their previous work programmes under the new policy with a higher production price, saying that they have added their gas production.
According to petroleum Ministry officials, the petroleum policies of 2001 and 2004 were almost non-starters, but the petroleum policy announced in 2012 and amended in 2013 had started producing results. The official said that due to a dip in international oil/gas prices the investors are too reluctant to invest in oil/gas sector and the E&P companies were reducing their workforce load. OMV Pakistan within a year has dislodged 200 employees as a result of low prices.