Govt goes after inactive exploration companies

[Muhammad Omar]

Workers are seen at an oil exploration site.—Reuters/File

ISLAMABAD: With gas shortages rising, the government has decided to tighten the noose around delinquent petroleum exploration and production companies for failing to meet their targets for oil and gas discoveries.

A senior petroleum ministry official told Dawn that companies which failed to complete formalities and start exploration activities within the committed timeframe were now being served notices to remedy their breach of agreement at the earliest or face the possible revocation of their licences.

The official said the ministry was also looking into how some companies were able to hoodwink the government in securing exploration licences without any past experience or expertise with oil and gas exploration.

Take a look: 12 petroleum exploration accords signed

A senior official said the Directorate General of Petroleum Concessions has issued notices to two companies — Al-Haj Enterprises and Tallahassee Resources of Canada — which had obtained exploration licences early last year but failed to start exploration or complete arrangements for doing so.

In a notice served on Al-Haj Enterprises, the petroleum ministry said the company had executed Exploration Licence for Potwar South (Block 3271-6) and Baska North Block in KPK in February of last year with a work commitment of 701 and 759 work units, respectively, but had committed three major breaches of the agreement.

The notice said the company did not submit the detailed credentials of its technical team for scrutiny. The company also did not hold technical and operating committee meetings (TCM/OCM) for the block “which is a sheer violation of article 4.1 of Joint Operating Agreement”.

The notice said the company also failed to offer a 2.5 per cent working interest to the government immediately after signing the petroleum concession agreement and obtaining exploration licences as required under the Pakistan Onshore Petroleum Rules 2013. “Therefore, the company has been found in material breach of the terms of agreement,” the notice said.

The Al-Haj group has a fleet of thousands of tankers, transporting oil products for leading oil firms in the country and in Afghanistan, but has no experience in oil and gas exploration.

The notice to Tallahassee Resources also found the Canadian firm in material breach of the terms of agreement for not opening a registered branch office in Pakistan within 90 days, as required under law. The company was also given a licence in August 2014, with work commitments of 307 work units for the Karak North Block in Khyber Pakhtunkhwa.

Tallahassee also did not hold TCM/OCM meetings in violation of the agreement and also did not transfer 2.5 per cent of their shares to the government of Pakistan as required under the law.

Both companies have been told that they were being served notices under rule 72 of the Pakistan Onshore Petroleum Rules to remedy the breaches by March 16, “failing which action will be initiated in accordance with rules for revocation of licence(s)”.

An official said the government would not allow companies to acquire exploration licences and then sit on them indefinitely without doing any work. He said the government had fully facilitated exploration firms to undertake exploration but it would not accept delaying tactics and would instead prefer to cancel non-performing licences and hold fresh bidding to award licences to more active firms.

Sources said an Austrian firm already operating in the Karak area was interested in taking over more exploration blocks in that region because of promising hydrocarbon indicators in the area.

Under the law, foreign companies not operating in Pakistan but having concessions in other geographical areas of the world will also be eligible to acquire petroleum rights, subject to demonstration of technical and financial capability. All companies having joined a consortium of companies in a concession and have gained at least three years of experience as a non-operator will be eligible to become operator subject to demonstration of technical and financial capability.

Published in Dawn, February 6th, 2015

 

[black-hawk_101]

I think GoP should welcome Investment from M.E for Coastal and sea exploration to take out Oil, Gas (even from sea bed coal.) to the coastal areas of Pakistan.