Oil and gas exploration and production sector: Delay in settling disputes bars govt from injecting gas into system

ISLAMABAD: Delay in the settling of the disputes in the oil and gas exploration and production sector has barred the federal government from injecting an estimated 250 mmcfd of indigenous gas into the system. Sources in the Petroleum Division said that at least, 63 cases are in various courts of law between the oil and gas companies and the State.

In the previous government of Pakistan Tahreek-e-Insaf (PTI), various attempts were made to allocate various exploration blocks to foreign investors which showed a lack of interest.

A number of foreign companies had already wind up their business in Pakistan due to various reasons. The E&P companies which had left included BP, Premier, OMV, BHP, Exxon and recently the under process Italians – ENI.

According to sources unnecessary litigation with E&P companies is causing a delay in exploration activities at home and had to import expensive LNG to meet demand of domestic, industrial and power generation.

As a result of deadlock around eight exploration licenses have expired and are awaiting extensions. As many as around 60 Mining and D&P Leases have also expired and are awaiting extensions, around 21 Fields are under Extended Well Testing (EWT) and are awaiting conversion to Leases, and 8 new EWT applications are pending approvals.

These ongoing and pointless litigations do not abode well for the new investment in the diminishing sector and stance shifts on policy matters will create more mistrust among the operators and E&P companies by impeding industry experts opined.

Copyright Business Recorder, 2022