As part of an ambitious plan to attract investment of $165 billion in oil and gas exploration, the government has unveiled a new tight gas policy that offers higher prices and duty exemptions.
Out of the total investment potential, the government is looking for an investment of $20 billion to explore the untapped tight gas reserves of 35 to 70 trillion cubic feet (tcf).
It is believed that Pakistan has untapped natural gas deposits of 66 tcf with potential investment of $38 billion.
The government also aims to explore the untapped shale gas reserves estimated at 95 tcf as well as offshore gas reserves of 38 tcf with investments of $54 billion and $22 billion, respectively.
It also believes that the country has the untapped potential of 3.6 billion barrels of crude oil, which needs a capital injection of $30 billion.
In a bid to stimulate the exploration and production of tight gas, the government has introduced a comprehensive policy outlining the key provisions for lease terms, price incentives and operational guidelines.
The policy titled “Tight Gas (Exploration & Production) Policy 2024” is aimed at encouraging investment, technological advancements and the efficient utilisation of tight gas resources.
Read Govt eyes major gas policy reforms
The initial term of the development and production lease for tight gas production will be up to 30 years, aligning with the proposed field development plan. Renewal for an additional period, not exceeding 10 years, is possible with justifications deemed acceptable by the government.
If gas reserves extend into a free area, the lease area may be extended to the adjoining free area based on technical justifications.
In cases of discovering tight gas under the existing development and production lease, amendments will be made to include the rights for tight gas reservoirs separately.
Upon expiry of the conventional gas rights, the area held for conventional reserves production will be relinquished, provided it does not impede gas pricing.
To exploit the tight gas reserves, a 40% premium on the zonal price of the Petroleum (Exploration & Production) Policy 2012 will be applicable. This pricing incentive applies to the existing and future exploration licences, petroleum concession agreements, mining leases, and development and production leases, meeting tight gas qualifications under Section 4 of the policy.
Published in The Express Tribune, February 1st, 2024.
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