Petroleum ministry has finally decided to seek approval of Petroleum Policy 2012 from the Economic Coordination Committee (ECC) of the cabinet instead of earlier planned forum of Council of Common Interests (CCI). A senior official of the petroleum ministry said the decision was made as the legal opinion received from the ministry of law explains that even after devolution the federal government retains the role of regulator for oil and gas exploration and production. He said approval from ECC will expedite implementation of policy to offer new oil and gas exploration blocks to the companies. Pakistan has offered more than 30 blocks for exploration in 2010, after which no petroleum concessions agreements were signed.
The ministry had earlier decided to approach CCI on the new policy as provincial governments had objected to the 50 per cent share of federal government in royalty. An official source said that a meeting with representatives of provincial governments was planned to be held on January 25 but was put off due to non availability of the representative of Punjab government. The meeting was called to address concerns of provincial governments in the light of legal opinion from the ministry of law.
Provincial governments wanted to have complete control in the award of exploration blocks under their jurisdiction as well as major beneficiaries of royalties instead of sharing it with the centre. The source said provincial demand of having representation in the state owned oil and gas companies will be addressed. New petroleum policy focuses on promoting investment in the upstream sector and in onshore frontier areas by providing globally competitive incentives. As around 27 per cent of the country’s energy needs are currently being met through imports. Pakistan’s average daily production of crude oil and gas in 2009-10 was 65,000 barrels and four billion cubic feet, respectively. The country’s indigenous oil and gas production meet around 53 per cent of its total energy requirements while other indigenous sources provide 19 per cent.
The incumbent government had early given Petroleum Policy 2009 which had to be amended by new Petroleum Policy 2011 as the market conditions warranted urgent changes for investment in view of increasing international energy prices. There has been a paradigm shift in the natural gas scenario due to higher trend of consumption of natural gas in the country and overall energy requirement was changing; therefore there was a great need to bring new policy with additives. Drastic increase in crude oil prices in the international market has changed the complexion of the exploration and production sectors which requires drastic changes in the approach towards the sector. This has forced the government to give new incentives for developing the indigenous hydrocarbon resources. Government plans to review the policy after five years for appropriate adjustments keeping in view the then prevailing conditions. The new policy ends the system of zones and offers a price of $6 per mmBTU for new discoveries instead of previous prices of $4.38 to $5.03 mmBTU in onshore. Shallow discoveries will be offered price of $7 mmBTU, deep $8 mmBTU and ultra deep $9 mmBTU. First three off shore discoveries will get a premium of $1 per mmBTU.