KP Asks Center to Withdraw Land Award Granted to Oil & Gas Firm

The Khyber Pakhtunkhwa government has asked the federal government to withdraw the decision of awarding an additional 738 sq km free area in Wana Block to an Oil and Gas exploration company, which was allegedly granted without the consent of the provincial government.

In pursuant to Article 1.3. (6) Read with Appendix-A of the Petroleum Policy 2012, DGPC being Federal Director cannot unilaterally approve an application for grant of an additional area without the consent of the provincial director of the respective province, the KP government said in a letter to Petroleum Division.

The copy of the letter available with ProPakistani said that DGPC did not consult the provincial government and as such, an arbitrary decision was taken by the Federal Director that has not only violated the Petroleum Policy 2012 but also contravened Article 172 (3) of the Constitution of Pakistan. The decision is thus ab initio devoid of the requisite legal effect.

The federal government had granted 738.11 sq km additional free area in the northwest of Wana Block to Al-Haj Enterprises (Private) Limited in lieu of relinquishment of equal area in the southeast of the Block and consequent revision of coordinates of Baska North Block. The decision was rejected by the KP government.

As far as the Rule 22(8) of Pakistan (Exploration & Production) Rules 2013 is concerned, there is a word “provided” which directly refers to the technical confirmation to be established entirely on technical justifications and that can only be established through reasonable seismic grid followed by well-discovery.

The seismic grid needs to be reasonably spilled over to establish firm grounds for structural extends into the adjoining free area. In this case, the operator has neither conducted seismic acquisition in the northern part of its own Baska North Block nor in the adjoining area of its Block.

Moreover, KPOGCL has paid Rs. 100,000 as per rules for including the entire Wana Block in the international bidding round, and thus it was not in the interest of the state and respective provincial government to grant a prospective portion of the Block to another operator.

Baska North Block was granted to Al-Haj Enterprises on February 28, 2011. The company has so far not commenced any drilling operations despite a passage of over 8 years. As per the past experiences, the additional area which is considered highly prospective will remain in their custody for years to come without carrying out exploration work.

In this way, the country will be deprived of much needed early production of oil & gas besides the colossal pecuniary loss to the country running in billions of rupees in the shape of income tax, royalty, production bonus, social welfare contribution, training funds, and rentals which could accrue to the government if the compact Block would be awarded to another operator through competitive bidding.

The country is facing a widespread energy crisis that has forced the government to import petroleum products and LNG costing the government billions of dollars. This substantial amount of foreign exchange can be saved if prudent decisions are taken in a fair and transparent manner.

It is pertinent to mention here that Wana Block is a composite Block and cutting a prospective area from this Block and amalgamating with Baska North Block would badly affect Federal and Provincial (GHPL’s and KPOGCL’s) 2.5 percent respective shares as per Rule 79 of Exploration & Production Rules 2013, the letter added.

Notwithstanding the above, the provincial government of Khyber Pakhtunkhwa reserves the right to seek remedy from the court of law if the above unlawful decision is not withdrawn and our request for excluding the revised/incomplete Wana Block from the upcoming bidding round scheduled for April 18, 2022, is not entertained.