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Seven oil, gas blocks lying dormant: KP

Updated October 14, 2017

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LAHORE: Khyber Pakhtunkhwa alleges that the federal government instead of playing a positive role is creating hurdles in the way of issuance of no-objection certificate (NOCs) for the approval and bidding of new oil and gas exploration blocks in the province.

The KP government maintains that due to centre’s full control over the matter related to policy, regulation and pricing, it missed targets of the ongoing year besides facing a loss of Rs5.8 billion in the form of royalty on crude oil, gas and liquefied petroleum gas (LPG).

“The government of Khyber Pakhtunkhwa got approval from the Ministry of Defence for five exploration blocks. However, the Federal Regulator (Directorate General of Petroleum Concession and other authorities concerned) made all out efforts to have these NOCs from the Ministry of Defence cancelled,” reads a brief report that contains the province’s stance and concerns over the ongoing exercise for unbundling the Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) as well as proposed division of the DGPC and structure of Pakistan Petroleum Exploration and Production Regulatory Authority (PPEPRA).

According to the official sources, the province raised and submitted these concerns along with suggestions to the Prime Minister Shahid Khaqan Abbasi in a recent meeting held in Islamabad on Sept 28.

The brief claims that KP had identified total seven blocks which were forwarded to the federal regulator. However, the regulator has so far not called for bids for any of the seven blocks that has hampered oil and gas exploration in KP. The provincial government claimed its oil and gas exploration and production targets of 2017 were not met due to the federal regulator.

“Our 2017 production targets were 64,000 barrels per day of oil, 685 mmcfd of gas and 880TPD and LPG. However, we were unable to achieve these targets and only produced 53,112 bpd of oil, 443 mmcfd of gas and 550TPD of LPG,” the report deplored.

It quotes the Petroleum Policy-2012 under which the training funds from various concessions in KP were to be split between federal and provincial governments. “However, despite 14 letters/reminders, the federal regulator didn’t bother to even answer one. Under this policy, KP requested six times to the regulator to call anomalies meeting but not a single reply came from the regulator. Due to these problems, seven blocks, which we had identified, are dormant in KP causing billions of rupees loss to the province in terms of royalty, gas development surcharge, excise duty, levy etc,” the report adds.

Earlier reports from the same meeting said the provinces, including the KP govt, felt the federal government was deliberately not pursuing bidding for concession licenses of new fields in domestic oil and gas as part of an effort to promote LNG imports.

Published in Dawn, October 14th, 2017