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ISLAMABAD: Petroleum Division has sought extension in Adam X-1 Development and Production lease (D&PL) for Hala Block for five years as Pakistan Petroleum Limited (PPL) will submit Supplemental Agreement, well informed sources told Business Recorder.

Petroleum Division maintains that Pakistan is facing challenges in meeting ever-growing energy needs due to expanding population, natural depletion of major oil/ gas fields, increase in demand, dearth of new big discoveries and economic growth.

Increasing exploration and development activities is essential to overcome these challenges. The activities are critical for the growth of Pakistan’s oil and gas industry and for a long-term energy security.

According to Petroleum Division, to accelerate an exploration and development programme in order to reverse the decline in crude oil production, to increase the domestic oil and gas production and to reduce burden of imported energy which otherwise will have adverse effect on the balance of payments and trade, the Government of Pakistan is taking various measures.

One such step pertains to the extension of the validity period of already granted Development and Production Leases (D&PL) and Mining Leases (ML) where various exploration and development activities are under way. The leases are extended to ensure the smooth running of operations and to enable the petroleum right holders to carry on their efforts for producing hydrocarbon reserves in the lease areas.

M/s Pakistan Petroleum Limited has requested for the extension in Adam X-1 Development and Production Lease for a period of five years from February 10, 2022 in compliance with rule 34 read with Rule 80(3) of Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013. The said lease was granted for a period of seven years from February 10, 2015.

Adam X-1 Development and Production Lease (D&PL) is covering an area of 19.42 square kilometres located in district Sanghar.

Rule-80(3)/ 2013 stipulates: “Notwithstanding any provision to the contrary, rules (34 & 35] shall also apply to petroleum rights as granted or renewed or applied for under, and defined in the Pakistan Petroleum (Exploration and Production) Rules, 1986 and Pakistan Petroleum (Exploration and Production) Rules, 2001.”

Rule 34 reads as follows: “A lease shall be for the period for which application has been made and supported by relevant technical and other information but shall not exceed twenty-five years.”

In the event the lease is initially granted for a period less than twenty-five years, it may be extended for the remaining period provided commercial production continues.

According to the re-evaluation carried out by M/s PPL, Adam X-1 field still has potential for further commercial production. Therefore, M/s PPL have requested to grant extension in the said lease.

M/s PPL has cleared all its financial obligation like training, lease rent, social welfare and production bonus in respect of Adam X-1 Lease, the case of grant of extension in the said D&P lease have been examined in detail and Ministry of Energy(Petroleum Division) has recommended the five year extension in Adam D&PL from February 10, 2022 subject to the following conditions: (i) M/s PPL shall submit Supplemental Agreement of applicable PCA over said Lease to formally adopt SRO No.830(U2014) of September 19, 2014 and Rule 34 of Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013 in-order to effectuate the extension in Adam X-1 D&PL within a period of thirty days from the issuance of approval letter; (ii) PPL shall fulfil all existing statutory obligations including royalty and rentals, etc., and will clear all outstanding obligations, if any, within thirty (30) days from issuance of approval letter whereas the rent shall be adjusted annually keeping in view the official rate of inflation notified by the State Bank of Pakistan or by a reference to an appropriate index so as to ensure that the rent retains its value in real terms; and (iii) all other terms and conditions of the original D&P Lease granted under and governed by Pakistan Petroleum (Exploration and Production) Rules, 1986 shall remain applicable.

Copyright Business Recorder, 2023

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