Exploration companies to get 40-50 percent higher price: tight gas policy approved by CCI

The Council of Common Interests (CCI) on Tuesday approved in principle Tight Gas Policy that will offer 40 to 50 percent higher price than that of price announced in Exploration and Production Policy 2009 to attract the exploration companies to invest in tight gas fields, Business Recorder has learnt.
The CCI has been informed that the country had a potential of 40 trillion cubic feet gas from tight fields and the recovery rate will be around 12 trillion cubic feet gas. The CCI that met with Prime Minister Yusuf Raza Gilani also decided that provinces would be taken on board while granting licenses to the Exploration and Production companies to recover gas from tight fields.
"Conventionally, lease is granted to exploration companies for 30-year period including extension period but in Tight Gas Policy, lease will be granted for 40-year period that includes 10-year extension," sources said, adding that exploration companies will be given 40 percent higher price over and above wellhead price announced in Exploration and Production Policy 2009. "But companies which succeed in recovering gas from tight fields within two years, will be able to get 50 percent higher price," sources maintained.
Provinces said that after 18th Amendment, they had 50 percent exploration rights and therefore they should be taken on board while granting licenses to exploration companies for Tight Gas fields. "The Petroleum Ministry has assured to take provinces into confidence while granting exploration rights for the fields in the respective provinces," sources added. According to a statement issued after the meeting, "The CCI met with Prime Minister Yusuf Raza Gilani approved the Tight Gas Policy in principle while it was decided that details of estimation and pricing will be worked out in consultation with the provinces.
The CCI was apprised that Tight Gas exploration is much difficult and the technology required is more expensive. The exploration companies do not opt for exploration until given additional incentives. Six new incentives were proposed to attract companies. It was mentioned that even after giving additional incentives the cost of gas available will be less than the gas imported. It is estimated that cost of tight gas will be US $6.5 BTU compared to imported gas ie US $12.3 BTU. The people of the area will be taken into confidence and the development of the area will be part of the policy, the statement said.