ISLAMABAD: The Petroleum Division is failing to enforce regulatory discipline related to national security in the upstream oil and gas due to the unauthorised sale of shares of a company.

The Islamabad High Court (IHC) has stopped the change of the board of directors and the sale of shares of Frontier Holdings Ltd (FHL) and Spud Energy Pvt Ltd (SEPL) to a foreign buyer, while the Directorate General of Petroleum Concessions (DGPC) was failing to scrutinise the sale proceeds.

The court has also stopped all actions related to the transfer of the existing shareholding or control structure of the two companies.

FHL is a major shareholder in SEPL, which allegedly effected changes in shareholding and management control without prior approval from the DGPC, as required under the Petroleum (Exploration and Production) Rules.

The SEPL reportedly changed ownership and management control, and the records submitted to the court showed that a new group of investors took over FHL’s shareholding and corporate control, resulting in indirect changes within SEPL, which operates petroleum exploration and production assets in Pakistan.

The court referred to the Petroleum (E&P) Rules, which state that any such transaction involving the transfer of shares, beneficial ownership, or control in an exploration or production company requires prior written approval from the DGPC.

However, both FHL and SEPL subsequently acknowledged to the regulator that these changes were executed without obtaining the required prior consent, citing internal corporate decisions made at the shareholder level.

Whereas the DGPC has not yet initiated any enforcement action under Rule 69(d), which authorises suspension or revocation of licenses for violations of the Petroleum Rules, including unapproved transfer of control or interest. Despite repeated attempts, neither the DGPC nor the Petroleum Division has issued any official statement to date regarding the measures taken to ensure full compliance with the Islamabad High Court’s directive.

Published in Dawn, October 26th, 2025