Islamabad : Feb 2 , 2024: The caretaker government decision to allow oil and gas exploration (E&P) companies to sell 35 % of their gas production to third party can make Pakistan ‘s E&P sector a promising destination for investment.
Pakistan was once a darling for foreign and domestic E&P companies for investment and it paid it good dividend over the years. The oil and gas sector plays a key role in attracting foreign direct investment (FDI) and subsequently it expedites the pace of financial growth and prosperity of any country . Pakistan’s oil and gas sector is stagnant for years basically due to its flawed policies.
Although the respective governments made some changes in its petroleum policies in the last few years , but these initiatives remained non responsive and Pakistan could not yield desired results from these measures. Pakistan ‘s comparatively less overhead gas price remained a stumbling block in seeking investment for its oil and gas sector. In recent years , the policy-makers intentionally turned Pakistan into an LNG import country for personal gains.
Pakistan is paying around $ 18 per BTU for LNG, but it did not offer even small portion of the price its paying to LNG importers to E&P companies to explore domestic resources. As a result , almost 90 % foreign E&P companies abandoned Pakistan in the last one decade.
Off the record interviews of some oil and gas sector experts and the officials related to petroleum policy designers indicate that Pakistan has been intentionally turned into an LNG import country and it damaged Pakistan in many ways. These experts say that Pakistan’s reliance on imported LNG shied away FDI from Pakistan’s oil and gas sector and bringing oil and gas exploration activities to the lowest level , besides enhancing cost of gas for all categories of the consumers.
After losing investment for oil and gas sector for years, finally the caretaker government of Anwaar ul Haq Kakar has finally taken a right decision of allowing oil and gas companies to sell 35 % production to third party.
After formal approval of the Council of Common Interest (CCI) , the government has made amendments in the Petroleum Policy 2012 which said the provision of right to E&P companies to sell up to 35 per cent of their share of pipeline specification gas to third party having OGRA license stands approved, through competitive process, without approval of the government or any of its entity, provided that the price(s) charged from third parties would not be less than the wellhead gas prices under Petroleum Policy 2012 for the respective zones.
Since the grant of the right to E&P companies to sell 35 % of production of gas to Third party is a major initiative it can turn Pakistan again into a good market for investment.