Amended E&P policy may be notified today

ISLAMABAD: The government may notify the amended Exploration and Production (E&P) Policy 2012 on Tuesday (today) to enable E&P companies to sell 35 per cent of gas from future discoveries to the private sector at auctioned prices.

Under the implementation framework approved by ECNEC on November 25, 2024, this move comes with a cap of 100 mmcfd per year for private sector purchases in the current year. A senior official told The News that the Law Division has approved the draft notification, and the acting secretary of the Petroleum Division has authorised its issuance by the Directorate General of Petroleum Concessions (DGPC).

“The petroleum secretary is currently abroad on official engagements,” the official said. When contacted, the DGPC said he was unavailable to comment on the notification status but would provide an update later today.

Since ECNEC’s approval, the Petroleum Division has taken over a month and a half to finalise the notification. Once issued, the amended policy is expected to attract $5 billion investment to the oil and gas sector, fulfilling a promise made by E&P companies to Prime Minister Shehbaz Sharif.

Officials anticipate significant interest from international and domestic firms in the upcoming onshore bidding, as investors will be assured of the ability to sell gas to the private sector at competitive prices. The remaining 65% of gas will be supplied to Sui companies at current wellhead prices, not the auctioned rates.

The revised policy is also expected to alleviate the financial strain on the E&P sector grappling with a Rs1,500 billion shortfall due to unpaid dues from Sui companies for local gas usage. By selling 35% of gas to the private sector at auctioned prices with advance payments, E&P companies hope to resolve the liquidity crisis.

The Council of Common Interest (CCI) had approved the amended E&P Policy 2012 during the caretaker regime on January 29, 2024, but directed the Petroleum Division to submit an implementation framework to ECNEC for approval.

After nearly 11 months, ECNEC had approved the framework on November 25, 2024, following recommendations from a 20-member task force led by Deputy Prime Minister Ishaq Dar. Under the CCI decision, E&P companies can sell up to 35% of pipeline-specification gas to third parties with OGRA licences through competitive bidding without government approval. However, prices must not fall below the wellhead prices specified in the Petroleum Policy 2012 for respective zones.

This provision applies to all existing licenses and leases granted under the Petroleum (E&P) Rules of 1986, 2001, 2009, and 2013, covering gas discoveries not yet allocated. Furthermore, provinces where natural gas wellheads are located will be given priority under Article 158 of the Constitution.

At the December 11, 2024, SIFC executive committee meeting, the petroleum secretary had confirmed that ECNEC had approved the framework with a cap of 100 mmcfd per year. The committee had directed the Petroleum Division to implement the policy swiftly to enable $5 billion in investments for enhanced exploration and production activities.

Meawhile, E&P companies are optimistic about the notification, viewing it as a step toward increasing the efficient use of energy. They argue that selling gas to private entities will ensure better utilisation compared to supplying it to Sui companies, which have fallen short in making timely payments for gas intakes.