Decision on 35pc gas sale to private sector today

ISLAMABAD: Deputy Prime Minister Ishaq Dar has convened the third meeting of 20-member Task Force on Gas-related Issues headed by him on Wednesday (today).

The meeting will finalize the much-awaited implementation framework to enforce the amended Exploration and Production Policy 2012 under which E&P firms would be allowed to sell 35 per cent gas to private companies from future gas finds at auctioned prices.

Top official sources say the meeting would also be briefed on the updates on other gas-related issues such as finalization of the circular debt settlement plan, evaluation of a proposal to lease out two LNG power plants by Petroleum and Power Divisions, rationalization of port charges for LNG imports, ways to enhance the consumption of RLNG in the country, completion of consultations between stakeholders on proposed offshore fiscal regime, digitization of DG PC, plan to provide fool-proof security to E&P companies and update on new gas tariff determination based on one month or three months to curb the circular debt.

According to high-ranking officials involved in the ministry’s internal discussions, E&P companies will first be required to recover depleted gas from their wells. Once this gas is recovered, they may sell 35 per cent of the additional gas to the private sector for transportation to clients. E&P and private sector companies may oppose new guidelines of the Petroleum Division in the meeting of the task force today. From new oil and gas wells, the Petroleum Division seeks to introduce a benchmark mechanism that would allow E&P companies to sell gas to the private sector. Officials are currently working on formulating this benchmark system. The Petroleum Division advocates deregulation of the entire oil and gas sector. However, concerns remain that in a deregulated environment, the private sector could secure windfall profits, while state-regulated gas companies might face unfair competition, leading to potential financial losses.

Despite this, the amended policy approved by the Council of Common Interests (CCI) guarantees that Sui gas companies will still receive 65 per cent gas from future discoveries without any bidding process. Currently, the companies obtain 100 per cent gas from E&P companies, but they have failed to adequately compensate, resulting in outstanding dues of approximately Rs1,500 billion. This severe liquidity crisis has hindered E&P companies from continuing their exploration and production activities.