PPL, OGDCL enter into agreement for Reko Diq project

Pakistan Petroleum Limited (PPL) and Oil & Gas Development Company Limited (OGDCL) have entered into a non-binding framework agreement with the federal government, Government of Balochistan, Government Holdings (Private) Limited (GHPL) and Barrick Gold Corporation (Barrick), for the restart of Reko Diq project.

PPL announced the development via a filing to the Pakistan Stock Exchange (PSX) on Monday, while a similar notice was shared by OGDCL as well.

The announcement comes after the Government of Pakistan and provincial government of Balochistan signed a new agreement with Barrick Gold Corporation of Canada for extraction of gold and copper reserves from Reko Diq with an investment of $10 billion on Sunday.

A new agreement was signed by representatives of the federal and Balochistan governments with a delegation of Barrick Gold, led by Chief Executive Dr Mark Bristow. As per the terms of the new agreement, the Reko Diq project would be revived and developed by Barrick Gold in partnership with Pakistani entities. The new project will be owned 50 percent by Barrick Gold and the remaining 50 percent shareholding will be owned by Pakistan, divided equally between federal government and the provincial government of Balochistan.

PPL in its notice to the bourse stated, “through the Framework Agreement, the Company has, in principle, agreed to participate in 8.33% equity (which may be held through onshore or offshore holding companies) along with OGDCL and GHPL, in aggregate amounting to 25% of equity in the project divided equally amongst the Company, OGDCL and GHPL.”

PPL said on the basis of directions issued by the Federal Cabinet, agreed to support the federal government with respect to payment obligations of the government for settlement of the historic Reko Diq dispute.

“The company’s participation in the Project remains subject to, inter alia, receipt of internal and corporate approvals, regulatory approvals, execution of definitive long form agreements and other conditions precedent stated in the Framework Agreement.

The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement, would involve legislative and judicial validation. The State Owned Entities had also engaged reputable financial, technical, legal and tax consultants to advise on the transaction,“ added the notice.