DGPC delays action on ownership change
Over six months have passed since show-cause notices were issued to Spud Energy Limited (SEPL) and Frontier Holdings Limited (FHL) over alleged changes in ownership and effective control without prior government approval, yet no visible enforcement action has followed.
The Petroleum Division's inaction has raised serious questions about regulatory oversight in Pakistan's upstream energy sector, particularly in cases involving changes in control of petroleum rights holders.
The matter stems from a transaction in which Phoenix Exploration sold its 73.3% stake in Jura Energy to IDL Investments Limited, a British Virgin Islandsregistered firm, on March 6, 2025.
The Directorate General of Petroleum Concessions (DGPC), operating under the Ministry of Energy (Petroleum Division), issued a show-cause notice on July 18, 2025, stating that the transaction was neither disclosed nor approved before execution, as required under petroleum rules.
According to the DGPC, it became aware of the transaction only after receiving a third-party letter dated May 2, 2025.
The notice warned that the sale may violate Rule 68(d) of the Pakistan Petroleum (Exploration and Production) Rules, 1986, and Rule 69(d) of the 2001 rules, both requiring prior government consent for changes in shareholding or effective control.
Under these rules, petroleum rights holders must disclose changes in shareholding, capital issuance, board appointments, voting rights and corporate structure.
The DGPC directed SEPL, FHL and Jura Energy to submit detailed documentation within 30 days, including shareholding structures before and after the transaction.
The companies were also asked to disclose board changes, voting patterns, transaction values, tax filings and whether capital gains or withholding taxes were paid in Pakistan, with warnings of punitive action, including possible revocation of petroleum rights.
Industry sources say the scrutiny is linked to national security, as approval mechanisms aim to prevent ownership by nationals of hostile countries.
Despite reported admissions that approvals were not obtained, the DGPC has not invoked its powers under Rule 69(d).