Energy experts and policy analysts have said that immediate measures should be taken by the federation and provinces to sort out their policy differences on the interpretation and application of the 18th Amendment vis-à-vis oil and gas exploration to improve harmony.
These views were expressed at a roundtable organized here at Institute of Policy Studies (IPS) on Thursday. The policy dialogue titled "Status of Petroleum E&P in Pakistan: A Deliberation on Future Strategy" chaired by Mirza Hamid Hassan, Member IPS National Academic Council (NAC) & Chairman IPS Steering Committee on Energy, Water and Climate Change; whereas Mohammad Raziuddin, CEO Khyber Pakhtunkhwa Oil & Gas Company Limited (KPOGCL) gave a keynote presentation.
The experts argued that multinational oil and gas companies have either left or are at the verge of closing their business operations in the country. Because of the impasse there has been a complete halt on exploration activities since 2014, they added. During his presentation, Raziuddin expressed hoped that the initiative taken by the government of KP in the shape of KPOGCL would play its role in overcoming the challenges through positive engagements with the federation and the policy stakeholders at all levels.
He further said that KPOGCL is making all-out efforts to bring in investment to start exploration and development work in eight blocks in the province, which has an immense potential to increase provincial GDP from $25 billion to $125 billion by 2025 through oil and gas production. Criticizing the proposed establishment of Pakistan Petroleum Exploration and Development Authority, after a lapse of seven years since the 18th amendment was passed, he argued that the federal government will empower it to take all kinds of decisions and the provinces will be ignored.
He further claimed that the federal government's stance on the critical issue is still to have all upstream regulations and becoming the sole regulator, rolling back the 18th amendment. No representation is being given to provinces in Pakistan Petroleum Exploration and Development Authority. Its authority will be extended to the whole of Pakistan including its territorial waters, Federally Administered Tribal Areas (FATA), and the Provincially Administered Tribal Areas of KP and Balochistan. It shall also apply to offshore Exclusive Economic Zone of Pakistan as defined in the Territorial Waters & Maritime Zone Act of 1976.
He said that the disadvantages of the federal government's stance are that not a single block has been offered to bidding since 2014 out of 35 pending blocks, the leases awarded before 2012 have also expired and are not being renewed, loss of more than Rs 20 billion to the federal government in terms of royalties has already been incurred, whereas the KPK has lost Rs 5.8 billion in one year in the form of royalty due to lower production.
He suggested that the proposed Pakistan Petroleum Exploration and Development Authority should only be authorized to regulate pricing and concession management of offshore, FATA, Azad Jammu & Kashmir and Gilgit-Baltistan, and its chairman should be appointed on rotation basis between federation and the four provinces. The provinces should have their own regulatory authorities for concession management.
Ashfaq Mehmood, former federal secretary, Muhammad Arif, President Pakistan Energy Lawyers Association, Salman Amin, Executive Director NEPRA (Tariff Division), Abdul Qaddus Khan, Provincial Director (Balochistan), Directorate General Petroleum Concession (DGPC) Khalid Rahim, Advisor Centre for Global & Strategic Studies, Javaid Akhtar, energy lawyer, and Ahmed Saeed, deputy director of Arizona State University's US-Pakistan Center for Advanced Studies in Energy (USPCASE) at National University of Science & Technology (NUST) also attended the talk.
Ashfaq Mehmood opined that provincial governments should work in synergy with the federal government. Mirza Hamid Hasan in his concluding remarks regarded the situation as a failure on part of both the federation and the provinces and stressed measures on war-footing to resolve the crisis.
"We have been benefiting from low oil prices for the last two years but now the prices are going up again because of the turmoil in the Arab world. Also, because of Opec and non-Opec oil-producing countries have decided to curtail their production to raise the oil prices. Owing to the Middle East crisis and the turmoil world over, the prices of oil have already risen from around $50 per barrel to $60 per barrel recently and they are expected to go further up putting severe pressure on the country's foreign exchange reserves. Overall, the situation seems bleak for Pakistan's energy sector since indigenous resources are not being explored and utilized," he added.