Gas sold to third parties must be prioritised for Sindh: Murad

KARACHI: Sindh Chief Minister Syed Murad Ali Shah on Saturday urged the federal government to seek his provincial government’s input on the oil and gas exploration & production (E&P) framework for selling to the private sector.

During a meeting of the Sindh Energy Holding Company Ltd (SEHCL), a subsidiary company of the provincial energy department, he chaired, Shah said that no sale should be authorised without the provincial government’s consent.

He demanded that the latest production statistics of oil and gas be regularly shared. He also decided to become a party in the WLO (windfall levy on oil and condensate) litigation.

The meeting focused on expanding exploration activities, increasing revenue streams and securing Sindh’s fair share in hydrocarbon reserves. Shah reaffirmed his government’s commitment to strengthening the energy sector.

He emphasised that the Centre must include Sindh’s input in the framework that allows oil and gas E&P companies to sell 35 per cent of their stakes to private parties.

He asked the Ministry of Energy’s Petroleum Division to include the following in the framework: gas sold to third parties should be prioritised for Sindh; any sale of gas (out of the 35 per cent) out of Sindh will be subject to an NOC by the provincial government.

He also demanded that provincial governments be allowed to collect the WLO directly through the E&P companies from the sale of gas from third-party gas buyers. He stressed that producers seek the approval of the Petroleum Division and the relevant provincial government for the sale of third-party gas.

He also stressed that the long-outstanding demand of Sindh for the sharing of actual data by the Petroleum Division relating to the wellhead and production for actual valuation of the provincial share be fulfilled. He said the draft framework must incorporate provisions for such data-sharing with the province regularly.

He also said that the underlying risks of price fluctuation and supply chain disruptions need to be considered while finalising the framework. He instructed the energy department to effectively pursue the Petroleum Division for the payment of the WLO.

Energy Minister Nasir Hussain Shah said the SEHCL plays a key role in energy exploration and resource management. He said it currently holds working interests in multiple exploration blocks, and has invested Rs1.925 billion in exploration since 2014.

A notable achievement discussed during the meeting was the commencement of production from three wells, marking the first time the SEHCL has generated direct revenue. The company anticipates net earnings of Rs113 million in 2025-2026, with additional revenue potential from a recently discovered gas field in Shah Bandar.

To enhance financial sustainability and maximise returns, the CM approved key initiatives. The SEHCL currently holds a 2.5 per cent working interest in exploration blocks, which limits the revenue potential.

The CM directed the energy department to increase the working interest from 2.5 per cent to 10-15 per cent in highly prospective blocks, ensuring a greater share in future discoveries.

He also approved the acquisition of the Hidan Block, a designated oil and gas exploration area in Dadu, Kambar and Shahdadkot districts. With an estimated gas reserve of 130-140 billion cubic feet, this block presents a lucrative investment opportunity.

According to the block’s details, the SEHCL retains a 51 per cent working interest, with the remaining 49 per cent to be farmed out to leading industry players. Projected first gas production is anticipated by the first quarter of 2028, with an estimated annual net cash flow of $1.64 million over 23 years.

The total investment is projected at $20.3 million, with the SEHCL’s share amounting to $10.35 million. This strategic move positions Sindh as a leading player in energy exploration, ensuring long-term financial gains and economic stability.

The CM said Sindh holds significant untapped reserves, particularly in tight gas fields, with an estimated 20-30 trillion cubic feet of potential resources. He said his government is also exploring opportunities for offshore drilling, which can be a game changer for Pakistan’s energy sector.

He also challenged the Centre’s decision to impose the WLO. He directed the energy department to pursue legal representation in the Islamabad High Court to secure Sindh’s rightful share of hydrocarbon revenues.

The meeting also held discussions on policy amendments to ensure greater provincial autonomy over oil and gas resources, aligning with Article 172(3) of the constitution.

Since Sindh is a key stakeholder in gas production, the CM demanded that the Petroleum Division reduce the number of its representatives in all state-owned companies from two to one, and replace them with representatives from the province.

He reiterated his commitment to expanding Sindh’s energy footprint, directing the energy department to expedite approvals and accelerate exploration activities. “Sindh is rich in natural resources, and we must ensure that these resources are utilised effectively for the benefit of our people,” he stressed.

“By increasing our working interest, securing new exploration blocks, and advocating for our rightful share in energy revenues, we are paving the way for a stronger, self-reliant Sindh.”