DGPC Removed over Controversial Policy Framework

By Newztodays Team

The Director General (DG) Petroleum Concession (DGPC) has become the first victim of controversial framework for allocation of gas to third parties.

The petroleum minister on Tuesday managed to removed the DGPC from his post over controversy regarding implementation of third party allocation of gas in the petroleum policy.Why the Oil Sector continues to struggle

Sources said that petroleum minister had sent a draft of framework to implement the third party allocation to the executive committee of national economic council (ECNEC).

The secretary petroleum and DGPC had opposed the draft of framework saying that it was against the spirit of amendment in petroleum policy that was approved in caretaker government by Council of Common Interest (CCI).

This controversy led to the removal of DGPC from his post and current charge was given to Director Riaz Ali.
Sources said that a controversy was also going on between secretary petroleum Momin Agha and Petroleum minister Musadik Malik.

The petroleum minister was more comfortable with former secretary petroleum Capt Mahmood who was recently removed from IT Ministry.
Now, the petroleum minister was also lobbying to remove the existing secretary petroleum and bring in capt Mahmood again to the petroleum division.

The exploration companies had held a meeting with Prime Minister Shahbaz Sharif and pledged $5 billion investment that was linked with the amendment in petroleum policy to allocate 35 percent of gas to third parties.

The caretaker government had approved amendment in petroleum policy and increased share of gas allocation to third parties from 10 to 35 percent.

Now, the Petroleum division has prepared a framework to table before Executive Committee of the National Economic Council (ECNEC) approval with terms that could jeopardize about $5 billion worth of expected investment from national and international players in the Exploration and Production (E&P) sector of the country.

According to industry sources, over seven months have passed since the Council of Common Interests (CCI) approved amendments to the Petroleum (Exploration and Production) Policy 2012. Despite this, the Petroleum Division has now prepared a framework for ECNEC, allegedly diverging from the spirit of the CCI’s decision and potentially putting the $5 billion investment at risk.

During the FY 2024-25, companies will be able to offer Up to 15%, in FY 2025-26 Up to 20%, in FY 2026-27: Up to 25%, in FY 2027-28 Up to 25%, in FY 2028-29 Up to 25%, in FY 2029-30: Up to 30%, in FY 2030-31 Up to 35%.

These companies will be allowed to offer up to 35 percent allocation in in FY 2031.
The amendment does not apply to Extended Well Tests (EWT), appraisal, development wells, and up-dip or down-dip potential wells production. According to framework, a benchmark for each E&P company will be formulated, above which the 35% will apply. The petroleum division has also said in framework that Producers must inform the Petroleum Division of their intention to sell a portion of their gas to third parties for review against benchmarks before initiating the sale.