Oil reserves: Centre, Balochistan partially resolve exploration impasse

Initial surveys will be allowed; drilling activity curtailed

ISLAMABAD:

After months of a standoff between the Balochistan government and the federal petroleum ministry, the latter has finally persuaded Quetta to end its ban on allowing oil and gas companies to conduct exploratory surveys in the province.

Both governments reached an understanding after talks between Balochistan Chief Minister Abdul Malik Baloch and Minister of State for Petroleum, Jam Kamal Khan. The agreement calls for allowing at least some of the more than two dozen oil companies be allowed to conduct initial, pre-drilling surveys of prospective sites in Khuzdar, Lasbela , Jhal Magsi , Kalat and Kharan districts and few other places.

“Yes, the chief minister has allowed some oil exploration companies to conduct pre-drilling surveys in few districts of the province,” confirmed Jam Kamal Khan. He added, however, that some companies are still not being allowed to conduct surveys.

The dispute started in March of this year, when the chief minister imposed a ban on all new exploration activities as a protest against the federal government’s failure to uphold the 18th Amendment and devolve responsibility for oil and natural gas to the provincial government.

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Prior to the 18th Amendment, the federal government was the only entity with jurisdiction over oil exploration activities. After the amendment passed in 2010, Quetta demanded that the federal government require its consent before handing out exploration permits. But after years of foot-dragging by Islamabad, decided to impose a unilateral ban. Given the fact that the provincial government has to provide security to oil exploration companies, the ban was relatively easy to enforce.



Conducting even initial surveys was prohibited under the ban. Quetta demanded that oil companies obtain no-objection certificates (NOCs) from district commissioners before proceeding with any activity, and it refused to provide NOCs to companies that requested them.

Following the ban in March, the federal ministry began negotiations with Balochistan on reinstating the permits for oil companies. It argued that the companies need to conduct those initial surveys before they can begin drilling. It also argued that such surveys are in the interests of the people of Balochistan, since each survey site can employ between 800 and 1,200 people for several months before the drilling commences.

While Balochistan has not agreed to allow full exploration activity, which would involve drilling as well, it has agreed to allow what are called 2/D surveys.

Balochistan Home Secretary Akbar Hussain Durrani confirmed that the exploration process has resumed in the province. Durrani told The Express Tribune that all local and foreign oil companies are fully engaged in their operational task. However, the Secretary did not say whether Islamabad has addressed the grievances of the provincial government. He said that the pre-condition of obtaining an NOC is still in place, but that Quetta would apply it when the exploration companies confirm the availability of oil and gas reserves in their allotted areas.

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Jam Kamal Khan, however, admitted that the provincial government still has reservations against his ministry’s policies towards the province. The denial of full financial share to the province out of the revenue being generated by the ministry is one of the key reservations, a senior official of the provincial government told The Express Tribune.

Published in The Express Tribune, September 21^st,  2015.