K-P demands exploration rights without bidding

Sends the proposal to CCI for review, but it couldn’t be taken up

ISLAMABAD: The government of Khyber-Pakhtunkhwa (K-P) has come up with a proposal, seeking the grant of petroleum exploration rights in a new block to each of the provincial energy companies as well as a federal energy company without going into the bidding process.

The K-P government had circulated a summary to the ministries concerned of the federal government to seek their input before submitting the proposal to the Council of Common Interests (CCI) - an inter-provincial body - for seeking the consent of all provinces, sources told The Express Tribune.



Provincial governments have formed energy ministries and departments, but they lack required expertise in oil and gas exploration.

Under the K-P proposal, the energy departments of provinces may be required to enter into joint ventures with companies of international repute in order to kick off work on the new exploration block.

According to sources, the K-P government sent the summary to the CCI for review in its meeting on Friday, but the council did not take up the matter.



The K-P government sought one-off relaxation in rules for the award of a new petroleum exploration block to each of the provincial holding companies in their respective provinces as well as one block to Government Holdings Private Limited (GHPL) in any part of the country.

K-P suggested that each provincial holding company and the federal holding company will offer at least 25% working interest in their respective blocks to its counterpart federal or provincial holding company, as the case may be.

Further 25% working interest will be offered to Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL).

Such stakes will, however, not be binding on the GHPL, OGDC and PPL and in case they decide not to accept the offer, the provincial holding companies will become 100% holders of the working interest. In no case, the provincial companies will hold less than 50% working interest.

The federal government said the CCI may consider the proposal subject to the condition that the provincial companies would remain majority shareholders in the awarded blocks.

The blocks, awarded to the provincial companies, can only be offered to Pakistani public sector exploration and production companies including GHPL.

It further said the provincial holding companies would enter into a petroleum concession agreement in accordance with the approved model.



Obligations pertaining to production bonus, training and social welfare will be applicable to these companies without any exemption. Work programme will be negotiated with the Director General of Petroleum Concessions (DGPC).

As the provincial companies do not have prior experience of operating the concession blocks, they will be required to either produce an agreement with an internationally renowned exploration and production services company or a high-calibre technical and management team with proven track record of overseeing and managing operations in the international petroleum industry.

Published in The Express Tribune, August 26^th, 2017.

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