Govt renews E&P licence to boost output

Also exempts Polish energy firm from relinquishing 10% licence area

ISLAMABAD:

The government has renewed the exploration licence of a Polish energy firm for the second time in a bid to boost oil and gas production in the country.

It has also approved exemption from the condition of relinquishing 10% of licence area at the end of first licence renewal.

So far, the polish company has failed to kick off hydrocarbon exploration to meet the country’s growing energy demand. The government approved the renewal and granted exemption after the company approached it at the end of first renewal.

It is part of the government’s policy that oil and gas exploration and production (E&P) companies would have to relinquish 10% of licence area if they fail to begin exploration by the end of first renewal.

However, it exempted the Polish firm from the condition keeping in view the fact that the country was facing an oil and gas crisis and companies were even barred from opening Letters of Credit (LCs) for oil imports owing to the shortage of dollars.

Sources told The Express Tribune that the Petroleum Division had received an application from Polish Oil & Gas Company, seeking the second renewal for two years for Kirthar Exploration Licence Block 2,667-7 with the objective of boosting oil and gas production.

The division placed the request before the Economic Coordination Committee (ECC) of the cabinet in a meeting held on March 30.

It told the ECC that the Directorate General of Petroleum Concessions (DGPC) had received a request from Polish Oil & Gas Company for entry into second two-year renewal of Kirthar exploration licence and exemption from the condition of Rule 21(4)c of Pakistan Petroleum (Exploration and Production) Rules 2001 to relinquish 10% of licence area at the end of first renewal.

Under the rules, discretionary powers for renewal rest with the government.

The company requested for the exemption as it wanted to further explore the area for potential prospects.

Petroleum Division told the ECC that the government, in accordance with Section 5 of the Regulation of Mines, Oilfields and Mineral Development (Government Control) Act 1948, may exempt the company from the applicability of Rule 21(4)c.

It pointed out that the case had been reviewed thoroughly taking into consideration geological complexities of the licence area, associated exploratory and operational risks, significance of geological and geophysical activities, security situation of the area, and payment of all government dues and guarantees.

A detailed evaluation of the request and recommendation of the regulator (DGPC) were shared with the cabinet body.

Petroleum Division requested the ECC to consider and approve the request of the company for entry into second two-year renewal of Kirthar exploration licence with effect from August 28, 2022 in accordance with Rule 21(2) of Pakistan Petroleum (Exploration and Production) Rules 2001, and grant exemption from the condition of Rule 21(4)c to relinquish 10% of licence area in accordance with Section 5 of the Regulation of Mines, Oilfields and Mineral Development (Government Control) Act 1948.

It would be “subject to the condition that the Polish energy company will drill an exploratory well up to the Pub Formation or up to the depth of 2,500 metres, whichever is shallower, during the second renewal period”.

The company will discharge/ clear all financial obligations like training, social welfare, rental for the extended period and any leftover obligations within a fortnight after the approval, the division said.

ECC considered a summary submitted by the Petroleum Division titled “Grant of Second Two Years’ Renewal over Kirthar Exploration Licence Block (2,667-7)” and approved the proposal.

 

Published in The Express Tribune, April 8^th, 2023.

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