CCI Approves Amendments in Petroleum Policy to Encourage Oil, Gas Exploration

The Council of Common Interests (CCI) Monday approved amendments proposed by the Petroleum Division in the Petroleum Policy 2012 for encouraging the exploration of new reserves of oil and gas. The 51st meeting of the CCI was chaired by Caretaker Prime Minister Anwaar-ul-Haq Kakar. On the recommendation of the Petroleum Division, the CCI approved that the old and new licenses and leases of petroleum exploration and production companies could be used for the exploration of reserves of oil and gas. This decision of the council would encourage the companies in the exploration of new reservoirs of gas. Under the amendment in the petroleum policy, gas exploration companies would be allowed to work with their present licenses in search of oil and gas reserves. The meeting was told that 85 percent of the crude oil and 75 percent of the gas used in the country was imported with precious foreign exchange reserves, which was a burden on the national exchequer. The present oil and gas reserves were depleting fast. The CCI also approved the recommendation of the Petroleum Division to give better wellhead prices to the oil and gas companies in the 1(F) petroleum zone. The exploration of oil and gas reserves in the 1(F) zone was a difficult and expensive process due to the difficult terrain and lack of facilities in the southern border areas of Khyber Pakhtunkhwa and Balochistan. The council approved the activation of leases for oil and gas till the economic viability of the reservoirs. It also approved the draft of Exploration and Production Policy 2024 of Tight Gas. The policy contained details regarding prices of tight gas, incentives for the promotion of exploration, and a regulatory framework for its usage. Tight gas was a kind of natural gas reservoir that could not be extracted with usual means and the gas wells are drilled with more than usual hydraulic pressure and with expensive equipment and technology. The meeting was told that according to a conservative estimate, 35 trillion cubic feet of tight gas reserves were available in the country. As per amendments in the new policy, the CCI approved an increase in the rate for the sale of natural gas to third party on a commercial basis from 10 percent to 35 percent, which would help in the reduction of the circular debt. The meeting was attended by caretaker federal ministers for finance, privatization, law and justice, four provincial chief ministers and high-level officials.