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ISLAMABAD: A meeting of the Council of Common Interests (CCI) has approved increase in sale price of natural gas to third parties on commercial basis, ie, from 10 percent to 35 percent as well as necessary amendments to the Petroleum Policy 2012 and draft Tight Gas Exploration and Production Policy 2024.

The 51st meeting of the CCI held under the chairmanship of Caretaker Prime Minister Anwaar ul Haq Kakar on Monday was presented for approval amendments in the Petroleum Policy 2012 by the Petroleum Division.

The meeting was informed that at present, 85 percent of crude oil and 25 percent of gas consumed in the country is imported, which incurs valuable foreign exchange which is a heavy burden on the national exchequer. Moreover, the existing reserves of oil and gas are rapidly decreasing.

New gas sale prices notified by Ogra

Regarding the exploration of new reserves, the Petroleum Division has proposed necessary amendments in the Petroleum Policy 2012. The meeting approved the recommendation of the Petroleum Division that old or existing licenses and leases of petroleum exploration and production companies shall be used for exploration of new oil and gas reserves. The decision of the CCI will encourage companies to explore new gas reserves.

Under this amendment, the petroleum and gas exploration companies will have the authority to work under the Petroleum Policy 2012 regarding the discovery of new oil and gas reserves on their existing old licenses. Existing companies will be encouraged to explore new gas reserves.

The CCI also approved better wellhead prices for oil and gas exploration companies in Petroleum Zone (F)1 on the recommendation of the Petroleum Division. Zone (F) 1 includes the southern border areas of Khyber Pakhtunkhwa province and the western border areas of Balochistan where exploration for oil and gas reserves is a difficult and expensive process due to difficult roads and lack of facilities.

On the recommendation of the Petroleum Division, the CCI has decided to lease oil and gas reservoirs based on till completion of the economic life of the reservoir. The CCI also approved the draft Tight Gas Exploration and Production Policy 2024. The policy contains details regarding tight gas prices, incentives to promote their acquisition and regulatory framework for their use. The meeting was informed that the tight gas refers to natural gas reservoirs that cannot be extracted by conventional methods and require higher than normal hydraulic pressure and expensive equipment and technology to drill a gas well. The meeting was informed that according to a conservative estimate, there are more than 35 trillion cubic feet of tight gas reserves in the country.

On the recommendation of the Petroleum Division, the CCI meeting also approved increasing the rate of sale of natural gas to third parties on commercial basis from 10 percent to 35 percent, which will help in reducing the circular debt of gas sector. The meeting was attended by the caretaker federal ministers for finance, privatisation, law and justice, energy, chief ministers of the four provinces, and relevant senior government officials.

Copyright Business Recorder, 2024

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