Oil and gas sector: Exploration companies now partial distributors

Govt allows firms to sell 10% of their product directly.

ISLAMABAD:

The government has decided to allow oil and gas exploration companies to sell ten per cent of their oil and gas  findings directly to consumers, under the Petroleum Policy 2011.

Sources told The Express Tribune that the Federal Minister for Petroleum and Natural Resources Dr Asim Hussain told Prime Minister Syed Yousaf Raza Gilani this in a briefing on Tuesday.

The government has also decided a bonus of one dollar per million cubic feet per day (mmcfd) for investors in offshore and shale gas. The price of offshore and shale gas will be $5.5 per mmcfd, sources said adding that one dollar incentive in form of bonanza will be given to those companies which succeed to drill first three wells, sources added.

The base price has also been enhance from existing $30 per barrel to $50 per barrel to determine wellhead price and windfall levy gains, sources said adding that no change has been made in the upper cap of $100 per barrel to determine well head price.

The Petroleum Policy 2011 proposes to reduce the appraisal period from two to one year, exploratory period from nine to six years and formulates a new mechanism for oil and gas prices.

The petroleum minister also apprised the Prime Minister about the IPI gas pipeline, adding that the survey of laying the pipeline in Pakistan has been completed and financial advisers will soon be appointed to undertake responsibilities pertaining to financial aspects of the project. The work on laying the pipeline in Pakistan is expected to start in due course while pipeline on the other side is expected to be completed by summer of next year.

The minister said that they were negotiating rates with Turkmenistan regarding Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline and covered a lot of ground in this regard. It may be mentioned that the TAPI project is the key to quench the ever increasing need of energy for the countries of the region.

The minister further said that the government is seriously considering providing free cylinders and stoves to the lower income group of the society that will be issued through BISP cards as well.

The issue of circular debt was also brought into the notice of the prime minister who was assured the issue will be resolved within weeks and not months.

Published in The Express Tribune, September 21^st,  2011.