Friday, 03 April 2009 11:27
E&P companies could be offered $4.08 per mmbtu
ISLAMABAD: The Exploration and Production (E&P) companies would be offered $4.08 per mmbtu in as per 2009 petroleum policy, which was $3.65 per mmbtu in 2007 and $2.99 per mmbtu in 2001 petroleum policy, Dr Asim Hussain unveiled this while formally announcing the Petroleum Policy 2009, here on Thursday.
“The policy is aimed at ensuring higher rate of returns to Exploration and Production (E&P) companies.” Hussain said lucrative incentives have been offered in the Petroleum Policy 2009 to attract maximum foreign investments.
He said: “The last petroleum policy was drafted in 2007 by a foreign consultant but the industry had strong objections to this policy which is why no exploration license had been granted for more than 2 years in the past.
About the new policy Adviser to the PM on Petroleum Dr Asim Hussain said that it would meet the future challenges of the energy demand and encouraged foreign investment.
“The government will take benefit from the expertise of local and foreign oil and gas exploration companies to meet the growing energy demand in the country.”
He said the government has set a target of drilling 100 new oil and gas exploratory wells during the year 2009 to meet the country’s growing energy demand. He said presently about 45 rigs are producing and supplying oil and gas across the country. The E&P companies would pay 12.5 per cent royalty and 40 per cent income tax to the government. The disputed biddable Gas Price Gradient (GPG) factor had been eliminated in the new policy, he added.
The discount during Extended Well Test (EWT) phase had been reduced from 15 per cent to 10 per cent to encourage the companies for early production. To fulfill the Corporate Social Responsibility (CSR) for local population of the area, several steps had been taken. 50 per cent job quota would be ensured for local population from where discovery had been made. The amount of social welfare obligation in the exploration phase had been razed from $25,000 to $30,000 in each zone. He claimed that the new Petroleum Policy 2009 would attract more foreign investment in the sector despite having law and order problem.
He said the government has set a target of drilling 100 new oil and gas exploratory wells during the year 2009 to meet country’s growing energy demand.
Giving a brief account of oil and gas production he said presently about 45 rigs are producing and supplying oil and gas across the country. He informed that the work in 25 blocks of Balochistan was held up for want of security clearance but with hectic efforts the government succeeded and obtained clearance in 16 blocks. He said the seismic survey of Dhaddar Block in Balochistan was completed in 2004 but the law and order situation the well could not be drilled.
Now after taking the stakeholders in to confidence, the well had been spud on March 29 2009. The adviser informed that Pakistan Petroleum Ltd (PPL) had entered into joint venture with a Yemeni company for undertaking exploration work in Yemen. Further a MoU had been executed with ENI, Italian company, to further boost exploration and production activities particularly in offshore.
About downstream oil sector, the adviser said when the oil prices peaked, the ex-refinery pricing formula was revised to stabilize the prices and bring relief to the customer.
Now when the prices have dropped, resultantly the refineries were financially unmanageable to run.
In this regard he said a revised formula had been agreed protecting the overall interest of all the stakeholders. This formula was now being processed for approval of the ECC. On the LNG import he informed that the Letter of Support needed for the LNG project by 4 gas, which was pending since long was approved by ECC and issued.
Resultantly, the company was in an advance stage of negotiating the LNG supplies which entails a fixed terminal at Port Qasim of 3.5 million tons capacity.
About IPI gas pipeline project, Dr Asim stated that the ECC had approved the project in principle and details would be given separately, after a final decision had been taken by the cabinet very shortly. The work on TAPI was also in progress, he maintained.
Giving details about oil and gas sector, the adviser said so far 728 exploratory wells have been drilled across the country, out of which a total 219 remained successful. The adviser said the success rate in oil and gas exploration was ‘very high’ in Pakistan as compared to other discoveries at the international level.
He said the ministry has so far awarded 119 exploration licences to public and private sectors, while 100 new licences with more incentives would be awarded under the new petroleum policy to local and foreign investors. Commenting on oil and gas production of the country, he said the gas production was 3.9 billion cubic feet per day (bcfd) and the oil production is 66,000 barrels per day (bpd) against the demand of 9 to 10 bcfd of gas and 77,000 bpd of oil.
Source: The News
Forex open Market rates & comments Archive