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ISLAMABAD: The Petroleum Division has proposed that the role of the National Accountability Bureau (NAB) and the Public Procurement Regulatory Authority (PPRA) should be abolished, while signing commercial agreements in the oil and gas sector. In a briefing to the Senate Standing Committee on Petroleum on issues and challenges in the oil and gas sector, Secretary Petroleum Dr Arshad Mahmood said that the NAB laws were creating hurdles in bringing investment in the oil and gas sector, and suggested that there should be some other forum to investigate commercial agreements pertaining to the oil and gas sector.

He said the federal government could overcome power shortages to some extent by utilizing unutilized import LNG capacity of other terminals, if the NAB would not probe EETPL (Engro Elengy Terminal Private Limited) over enhancing its capacity from 400 mmcfd to 600 mmcfd.

The secretary said the other LNG terminal operators shied away to talk on supply of unutilized capacity of LNG to the power sector amid lowest water level at Tarbela Dam.

The Petroleum Division cannot utilise 200 mmcfd unutilised capacity of LNG terminals, after the NAB initiated an inquiry against capacity enhancement of Engro terminal, he added.

He maintained that 5 MW power is produced from one mmcfd LNG.

The private sector should be encouraged to utilise idle LNG capacity either to supply to K-electric and other sector of economy, he argued.

The secretary said the supply of LNG from Engro Terminal-I would be fully restored to gas companies on July 5, 2021.

In March 2019, the certification of Engro-terminal had expired.

The Sui Northern Gas Company had repeatedly sent them letters.

He said 3,800 mmcfd gas was required to meet the demand of all sectors of the economy including domestic, however, due to dry docking by Engro, the federal government had to suspend supply of LNG to CNG, fertiliser, and non-export industry in the whole country.

He further suggested that PPRA rules should not be applicable on government companies listed on Pakistan Stock Exchange as this can have impact on their working.

In finance bill 2021-22, the government had given a number of incentives to foreign companies intend to come in exploration and production side or setting up deep convergent refineries.

Investment-related incentives in the oil and gas sector is already approved in the current finance bill, however, new petroleum policy will soon be tabled in the Cabinet, which covers all aspects of the oil and gas sector, he added. The secretary further revealed that $14 to 15 billion was capital cost of setting up a refinery.

He said that incentives in taxes were offered to Saudi Arabia state-owned Aramco in setting up refinery in Hub with a capacity to produce 350,000 barrels of oil per day.

He said the foreign companies were facing security problems and the Petroleum Division was in talk with paramilitary forces on the security of foreign staff working in the oil and gas sector.

He further said that the government had also approved incentives in the current finance bill 2021-22 for upgradation of five refineries’ capacity to produce international standard Euro-V petrol and diesel.

“For the up-gradation of local refineries, the federal government will provide 30 to 40 percent finance and 70 percent will be met by refineries from their own sources,” he added.

“The local refineries have faced Rs40 billion inventory losses in the last five years,” he maintained.

He further suggested that the government-to-government agreement (G-to-G) should be inked in allocation of the E&P blocks such as given in the CPEC projects.

He further suggested that 2-D and 3-D surveys should be conducted prior to auction of block to E&P companies, so that exact data of mineral deposits should be acquired.

Until now, 18 attempts of offshore drilling were taken and no major recovery was made since 2018, an official of the Petroleum Division said. The secretary said that the accumulated circular debt of the oil and gas sector had reached Rs1,100 billion since 2010, and government had devised a policy to curtail the huge amount of debt.

The receivable of the Pakistan State Oil (PSO), which was a government agency, has reached Rs355 billion and the prime minister tasked the Petroleum Division to come up with a plan to clear its debt. Talking about the internal structure of the Petroleum Division, he said that the ministry should have a policy for technical and intellectuals in R and D wing, who have no say in the policy and neither have service structure. He maintained that the ministry was working to look after the corporate affairs of the government companies working in the oil and gas sector.

Copyright Business Recorder, 2021

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