E&P firm allowed production at Taj field

Govt hopes hydrocarbon production at field will ease gas crisis

ISLAMABAD:

The government has allowed United Energy Pakistan Limited (UEPL), a litigant which had held up public funds, to start commercial production at Taj oil and gas field, hoping that it will help ease gas crisis in the country.

Earlier, a plan had been drawn up to renew the revoked licences of exploration and production (E&P) companies in a bid to cope with shortage of gas and avoid highly expensive liquefied natural gas (LNG) purchases from global market.

The government had also planned to reach out-of-court settlements with the companies that had filed cases in courts as the resolution of disputes would give a fresh impetus to oil and gas production.

UEPL got the go-ahead after it filed an application with the Petroleum Division, seeking government’s approval for the Declaration of Commerciality and Field Development Plan, and the grant of development and production lease for Taj field (Mirpurkhas block) in accordance with Rules 24, 27 and 33 of Pakistan Petroleum (Exploration and Production) Rules 1986.

UEPL had been in litigation with the government and had held up public funds. The cabinet recently approved a request to allow the company to start commercial production at Taj hydrocarbon field.

Before that, the PM had directed Petroleum Division to include in its summary the details of ongoing litigation with UEPL and the quantum of public funds withheld by the company on account of litigation.

The Petroleum Division told cabinet that Pakistan was facing challenges in meeting growing energy needs due to expanding population, natural depletion of major oil and gas fields, increase in demand, dearth of new big discoveries and slow economic growth.

It said increasing exploration and development activities was essential to overcome the challenge. “Expeditious exploration and production activities were necessary for the growth of Pakistan’s oil and gas industry and long-term energy security.”

It was of the view that accelerated exploration and augmented development work would reverse the decline in crude oil and gas production, increase domestic hydrocarbon production and reduce the burden of imported energy, which otherwise would have adverse effect on balance of payments and trade.

Petroleum Division said leases had been granted to ensure the smooth running of development operations and to enable petroleum rights holders to make efforts for producing hydrocarbon in lease area.

Cabinet was informed that Petroleum Division had received an application from UEPL, seeking government’s approval for the Declaration of Commerciality and Field Development Plan, and the grant of development and production lease for Taj field (Mirpurkhas block).

Rules 24, 27 and 33 of Pakistan Petroleum (Exploration and Production) Rules 1986 state that after having finalised necessary appraisal and delineation work, the holder of a licence may issue a declaration to the government, stating that he considers a deposit as commercial, and prior to or upon issuing the declaration, the holder must submit a report in accordance with Rule 52(d).

Upon issuing such a declaration, the holder is obliged to apply for the grant of lease in respect of discovery area.

Cabinet was further informed that together with the application for lease, the holder shall enclose a general plan for development and production of petroleum deposits.

Published in The Express Tribune, January 13^th, 2023.

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