Sui mining: Centre, Balochistan agree to extend lease by 10 years

Wellhead gas price to be set at 55% of 2012 petroleum policy

ISLAMABAD: The Ministry of Petroleum and Natural Resources and the Balochistan government have signed a memorandum of agreement for extending the Sui mining lease for the next 10 years, officials say.

Under the agreement, the wellhead gas price for Sui development and production lease will be fixed at 55% of the Petroleum Exploration and Production Policy 2012.

In addition to this, Pakistan Petroleum Limited (PPL), which operates the Sui field, will pay 10% of the wellhead value to the Balochistan government as the lease extension bonus.

The agreement will entitle the Balochistan government to increased royalty, scholarships and jobs. Other obligations such as production bonus, employment and social security will also be applicable according to the Petroleum Exploration and Production Policy 2012.

PPL will make an investment of Rs20 billion in exploration activities in Balochistan. It operates 26 exploration blocks and has stakes and working interests in 17 others.

Earlier, the provincial government had demanded a 100% increase in gas price for the Sui field based on the petroleum policy of 2012. However, the central government agreed to increase the price by 50%, arguing rates of fuel had massively gone down in the previous year.

The federal government had also given a one-year extension in the Sui field lease to PPL, but Balochistan protested against it. Afterwards, a working group was set up that decided, after a series of meetings, to come up with a revised lease agreement.

The one-year extension decision was taken only a day before expiry of the mining lease in what they said was in the larger national interest as an interim arrangement in order to avoid disruption in gas supply.

Published in The Express Tribune, May 21^st, 2016.

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