ISLAMABAD: After prolonged resistance from Sui gas companies, the government on Friday issued a statutory order that allowed exploration and production (E&P) firms to sell over one-third of their newly discovered gas reserves to private companies with maximum annual cap of 100mmcfd.

The SRO comes after the intervention of the Special Investment Facilitation Council (SIFC) and a special committee led by Deputy Prime Minister Ishaq Dar after almost a year-long resistance from government-owned gas companies over this issue.

The E&P firms had been complaining that their additional investment plans had been severely hindered due to acute non-payments by the state-run gas distribution companies.

The petroleum division initially proposed in 2022 putting in place some mechanism under which an agreed share of gas from new discoveries can be allowed to be sold to other parties to ease cash flows challenges to E&P firms.

The Council of Common Interests (CCI) during the caretaker government had decided in January last year to allow E&P companies to sell 35pc of their fresh output to third party up from previously 10pc production to facilitate cash flows to those making big investments and take risk in finding and producing new hydrocarbons.

The SRO said the E&P firms shall have the right to sale up to 35pc (instead of 10pc in the past) of their share of pipeline specification gas to a third party having Ogra’s licence, through a competitive process, without the approval of the government or any of its entity. However, the price from the third party would not be less than the wellhead gas prices under Petroleum Policy 2012.

Under the rules, the gas producers shall intimate the petroleum division of the intention of a portion of volume intended for the third party through competitive bidding. The third party would have the right to use Sui network or lay own pipeline or use virtual pipelines for transportation of its share of gas while fully complying with applicable regulatory regime.

Published in Dawn, January 18th, 2025