The federal and Sindh governments are locked in a row over who has rights over oil and gas exploration blocks following the passage of 18th Constitution Amendment with the latter claiming that the Centre is meddling in its affairs by extending exploration leases.
According to sources, the Sindh government argues that it has the right to grant an extension in leases of even those oil and gas blocks which were awarded to exploration companies prior to parliament’s adoption of 18th Amendment.
However, the central government counters, saying it is the only authority that can extend the period of leases of blocks whose licences were granted prior to the 18th Amendment.
The dispute arose after the central government gave an extension in the development and production lease of Usman field in Mirpurkhas, Sindh.
In a letter sent to the Sindh government on April 23, the Ministry of Petroleum and Natural Resources reminded it that prior to the 18th Amendment, the federal government exclusively handled matters pertaining to mineral, oil and natural gas.
Clause 172(3) of the Constitution, added by the 18th Amendment, says “subject to the existing commitments and obligations, mineral, oil and natural gas within province or territorial waters adjacent thereto shall vest jointly and equally in that province and federal government.”
The article further says “subject to the existing commitments and obligations, constitutional positions prior to the 18th Amendment shall continue to apply to all petroleum concession agreements, licences, leases, etc.”
The ministry stressed that the 18th Amendment had not affected the legislative and executive authority of the federal government as none of the relevant provisions of the Constitution had been amended. Therefore, all issues pertaining to oil and gas agreements executed prior to the 18th Amendment will remain with the federal government.
Referring to the extension in lease of Usman field, the ministry said the government had awarded exploration licence for the block on December 29, 1999, way ahead of the passage of 18th Amendment in 2010. “Provisions of the 18th Amendment will be applicable to petroleum concession agreements, licences and leases which were signed after its promulgation,” it said.
Addressing concerns about the Petroleum (Exploration and Production) Policy 2012, the ministry made it clear in the letter that the policy would be applied to those petroleum concessions which would be awarded or extended under the policy.
The ministry dismissed the talk that the right and privilege of the provincial government had been breached, stressing that the action was taken in the interest of the province as it would lead to an increase in oil and gas production.
Published in The Express Tribune, May 16th, 2013.
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