Government announces petroleum policy 2012

ISLAMABAD: Announcing the new Petroleum (Exploration & Production) Policy, 2012, Adviser on Petroleum & Natural resources Dr. Asim Hussain said in order to accelerate exploration, the period of Exploration License has been reduced from 9 years to 7 years i.e., 5 years initial term (Phase-I of3 years + Phase-II of 2 years) + Two renewals of one year each.

Addressing press conference here Monday, he said similarly appraisal renewal period has been reduced from two years to one year. In order to attract much needed foreign investment in E&P sector, better gas price has been given; US$6 per MMBTU for Zone-III, $6.3 per MMBTU for Zone-II, $6.6 per MMBTU for Zone-I, $7 per MMBTU for Zone Offshore Shallow, $8 per MMBTU for Zone Offshore Deep & $9 per MMBTU forZone Offshore Ultra Deep). Windfall Levy has been reduced from 50% to 40%.

He said base price of crude oil and condensate for Windfall Levy has been increased from $30/barrel to$40/barrel; which will escalate each calendar year by $0.5/barrel; Windfall Levy will be equally shared between Federal Government and Provincial Government. Gas pricing Ceiling of $100/barrel replaced with $110/barrel; 5% carried interest (Government Holding 2½%, Provincial Government Holding 2½%);

Dr. Asim said Provincial Government Holding company shall also have first right to makeup required minimum Pakistan working interest without reimbursement or payment of any past cost; Renewal of lease after expiry of lease term for another five years subject to payment of an amount of 15% of wellhead value; Sale of 90% share of pipeline specification gas to Government of Pakistan and 10% by E&P companies to any buyer with prior consent of Government;

He said a bonanza of $1/MMBTU shall be given for first three discoveries in offshore area. Policy, 2012 gas price will also be extended to leases for additional 10% production over and above commitmentof Development plan approved by the Government. Introduce TCM/ OCM to monitor physical progress of minimum work commitment and other obligations.

He said 10% of royalty will be utilized in district where oil and gas is produced for infrastructure development; For pricing and delivery obligations for natural gas, the gas will be delivered at outlet flange (Field Gate/ Delivery Point).

Sui Southern Gas Company (SSGCL) and Sui Northern Gas Company Limited (SNGPL) will be responsible for laying pipelines for which they will get tariff on transportation of gas as approved by Oil & Gas Regulatory Authority (OGRA). For offshore, gas will be delivered at nearest access point to an existing regulated transmission system; or at the shore within coastal locations, he added. (PPI)