Prime Minister Shahid Khaqan Abbasi has directed to hold fresh bidding proposals for the auction of petroleum exploration blocks.
The previous government of Pakistan People’s Party halted the bidding process when their tenure ended in 2013.
Criticism and Losses
The current government was heavily criticized by the other provinces for not re-initializing the bidding process for discovering new petroleum resources in their vicinity.
Provincial governments say that they have lost a significant amount of money due to the government’s delay in starting the auction process during the past four years.
Khyber-Pakhtunkhwa representatives say that due to low petroleum production, the province lost Rs. 5.8 billion in a year. Furthermore, the federal government lost around Rs. 20 billion in royalty fees.
The federal government said that it was focusing on Liquefied Petroleum Gas (LNG) import to reduce the gas shortage in the country.
Now the government has decided to restart the next phase of auction process for petroleum exploration blocks. It will be inviting bids from exploration companies to invest in the petroleum sector.
The Petroleum division has been ordered by PM to start the bidding process for equipment, after getting clearance from the Defense Division. According to 2014 auction, 50 blocks were cleared for bidding.
The results of bidding in 2014 were:
- Oil and Gas Development Company Limited (OGDCL) won rights for 29 blocks.
- Pakistan Petroleum Limited (PPL) got 10 blocks.
- Mari Petroleum won rights for one block.
- OMV Pakistan won rights for one block.
- Oil and Gas Investment Limited won rights for two petroleum exploration blocks.
Most of the rights were won by state owned companies, which showed the lack of interest from foreign companies.
Only two new companies entered the petroleum arena. Among them were Tallahassee Resources – a Canadian company – and Al-Haj Enterprises – a Pakistani company.
The distribution of 50 petroleum exploration blocks in the provinces are as follows:
- Balochistan: 21 blocks—14 to OGDCL and 4 to PPL
- Punjab: 15 blocks
- KPK: 8 blocks
- Sindh: 6 blocks
The decision of the government comes after heavy criticism. Current government has been criticized heavily for ignoring the country’s rich oil and gas resources and focusing on imports instead.
However, it is hoped that the bidding process for petroleum exploration blocks paves the way for companies to find new fuel resources for energy-strapped Pakistan.
Via: Express Tribune