Baluchistan criticizes draft petroleum policy – Pakistan oil and gas sector update

Thursday, December 1st, 2011 12:57:18 by

Baluchistan criticizes draft petroleum policy – Pakistan oil and gas sector update

ISLAMABAD (APP) – Parliamentary Secretary for Industries and Production Pir Haider Ali Shah on Sunday proposed certain amendments in the draft petroleum policy 2011, to promote exploration activity in Khyber Pakhtunkhwa (KP) and Balochistan.

He said the draft policy was contemplating to disband zones and bring the whole country under uniform structure of gas prices. “The elimination of zones will be unjust and will discourage exploration activities in difficult high risk areas of KP and Balochistan,”
he noted.

Pir Haider Ali in a statement issued here, said the government had posted the policy on the web pages and invited the feedback and to gauge the response of different segments of the society. He said the current petroleum policy 2009 had divided the country
into three licensing zones based on investment and risk. Zone-I was comprised of 80 percent area of Balochistan, entire KP and Potoharerrain of Punjab whereas Zone-II and Zone-III were flagged in Sindh and Punjab.

He said the earlier petroleum policies were formulated to encourage petroleum exploration in un-explored, high risk areas where cost of exploration was high. Due to the absence of basic infrastructure, difficult access and availability of logistics, this
zoning was done to attract investment in these areas, he added. He said the elng 3 per Million British Thermal Unit (MMBTU), respectively.

He said as a result of the proposed petroleum policy the drilling of a well in Zone-I will cost about $15-20 million whereas drilling of a well in Zone-III to cost about $5-7 million. This will clearly make a total shift in exploration activities especially
when price of gas is going to be same, he added.

He said all focus will be diverted to easy areas and exploration activities in Khyber Pakhtunkhwa and Balochistan provinces will be even go further down. He said the royalty is less a function of price but more a function of size of production. No matter
what price, no production is bound to result in no payment of royalty.

Likewise low production will have a low volume of royalty payment.

Shah said that already the provinces of Khyber Pakhtunkhwa and Balochistan are suffering from poor law and order and hence there is already less exploration and production activities in these provinces.

“Equal price of gas will definitely to have adverse impact on the exploration activities,” he maintained.

Pir Haider Ali Shah proposed that the government should maintain the zoning system of petroleum policy 2009.

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