ISLAMABAD: A committee led by Deputy Prime Minister Ishaq Dar on Monday decided that the Council of Common Interests’ (CCI) decision allowing E&P companies to sell up to 35% of their gas to third parties will be fully implemented without revision.
According to sources, in order to secure the investment of five billion dollars, a meeting of the committee headed by the Deputy Prime Minister Ishaq Dar was held on Monday, in which the proposals of the Petroleum Division were rejected regarding a decision of the CCI. They said that petroleum division has submitted few proposals regarding the much-awaited framework to implement the decision of CCI regarding sale of 35pc gas to private parties by the E&P companies before a meeting held under the chair Deputy Prime Minister Ishaq Dar on Monday. However, they said this committee has made it clear to the Petroleum Division that it will not rewrite the CCI decision and the CCI’s decision will be implemented in true letter and spirit. And, also directed the petroleum division to submit framework within fifteen days before this committee and late this framework will be presented before the ECNEC, sources added.
Reportedly, the Petroleum Division has included some more points in its earlier proposed implementation framework, which include:
- Gas from new discoveries in the existing blocks will not be allocated to the private sector,
- E&P Companies are needed to first recover the depleted gas from the existing wells for Sui Companies and the recovery of depleted gas would not be allowed to sell to the private sector companies, and
- A phased implementation of the amended E&P Policy 2012, with an implementation span of seven (07) years, starting from 15% selling share in FY 2024-25 to 35 % sale in 2030-31.
However, the committee, established by Prime Minister Shehbaz Sharif under the leadership of Deputy Prime Minister Ishaq Dar, on Monday reaffirmed the Council of Common Interests (CCI) decision, allowing Exploration and Production (E&P) companies to sell up to 35% of their pipeline specification gas to third parties without government approval. This move is anticipated to significantly boost the country’s energy sector by attracting both local and international investment.
Sources said that the committee has so far rejected the proposals put forth by the Petroleum Division, which allegedly deviated from the original spirit of the CCI’s decision. The committee made it clear that the it will not re-write the CCI decision and the CCI’s decision would be implemented in its entirety. The committee also directed the Petroleum Division to submit a new framework within fifteen days, said the sources.
The CCI, on January 26, 2024, had approved amendments to the Petroleum (Exploration and Production) Policy 2012, enabling E&P companies to sell a portion of their gas to third parties.
As per sources, despite the CCI’s earlier decision, the Petroleum Division proposed a phased implementation of the 35% gas sale, starting with 15% in FY 2024-25 and gradually increasing to 35% by FY 2031. This proposal, along with other conditions like the exclusion of certain wells and the requirement for producers to notify the Petroleum Division before initiating sales, has been met with industry concern.
It is also learnt from sources that Deputy Prime Minister chaired the second meeting of the Committee constituted by the Prime Minister on Petroleum industry issues. Ministers for Planning and Special Initiatives, Petroleum and Power along with other senior government officials and representatives of petroleum industry participated in the meeting.
The Committee reviewed the progress on the actionable points of first meeting. Deputy Prime Minister expressed his satisfaction with the progress made so far and advised to actively pursue all the initiatives.
The Committee agreed to proceed on all the major areas including
(i) Early development of integrated energy plan
(ii) Evaluation of gas usage from dedicated fields to optimize utilization
(iii) Restructuring of Sui companies
(iv) One window facilitation cell for petroleum exploration operations
(v) Process automation and digitalization of workflow at DGPC
(vii) Early finalization of the framework for implementation of CCI’s decisions regarding petroleum sector
(viii) Rationalization of port charges keeping in view the international standards
It is relevant to note that the reaffirmation of the CCI’s decision is seen as a crucial step in maintaining investor confidence in Pakistan’s energy sector. The decision to allow E&P companies to sell a portion of their gas to third parties is anticipated to significantly boost the sector by creating a more competitive market environment and attracting substantial investments. However, internal challenges within the Petroleum Division have complicated the situation. The newly appointed Director General of Petroleum Concessions, Riaz Ali, was recently hospitalized due to acute stress and exhaustion, reportedly linked to the harsh management style of Minister of Petroleum Musadiq Malik. According to sources, Minister Malik’s aggressive behavior, including shouting, throwing files, and erratic scheduling of meetings, has demoralized ministry staff and stalled progress on key energy policies.
It is pertinent to mention that these internal issues have raised concerns about the ministry’s ability to effectively implement the CCI’s decision and other critical energy policies. E&P companies, already hesitant due to the lack of progress, fear that the investment environment in Pakistan’s energy sector may deteriorate further if these challenges are not addressed promptly. Industry stakeholders have been expressing frustration over the ongoing delays and the uncertainty surrounding the implementation of the CCI’s decision. The lack of a finalized framework has left companies unsure of how to proceed, potentially jeopardizing the much-needed $5 billion investment in the country’s E&P sector. However, despite these challenges, the committee’s decision to uphold the CCI’s ruling without amendments is seen as a positive development. It reinforces the government’s commitment to creating a favorable investment climate and ensuring that the country’s energy sector remains on track to meet its future demands.
