Petroleum Div fails to sign PCAs for three blocks despite six months’ passage

ISLAMABAD – The Petroleum Division has failed to sign Petroleum Concession Agreements (PCAs) for three blocks despite passage of six months as the country’s gas production has declined by 700mmcfd while the oil production decreased by almost 26000 bopd. 

It is a matter of great concern that despite a lapse of more than 180 days, Petroleum Concession Agreement (PCA) for Nowshera block has not so far not been executed with Oil and Gas Development Company Limited (OGDCL) and precious time of six months has been wasted away, official source told The Nation.

Khyber Pakhtunkhwa government has raised the issue of not signing of Petroleum Concession Agreement (PCA) for Nowshera block with Petroleum Division and has written a letter in this regard, the source said. It is an undisputed fact the currently the country is facing acute energy shortage which has forced the government to import oil and RLNG costing hefty amount of foreign exchange to bridge up the gap between demand and supply, said the letter.

Petroleum Division had announced international competitive bidding round on 15 October 2020 for award of 20 Petroleum Concession Blocks under Pakistan Petroleum Policy 2012 and Petroleum Rules 2013. The bidding was held on 15 January 2021. For 15 explorations blocks Oil and gas exploration companies bids whereas the DGPC received no bids for five blocks. The government has however failed to sign PCAs for Nowshera, 28 North and DIK West so far.

In a letter to secretary petroleum, the KP government has said that due to slow exploration activities, the country’s gas production has declined by 700mmcfd, while the oil production decreased by 26000 bopd. The production of gas has declined from 4200mmcfd to 3500mmcfd, while the oil production, which was early hovering around 100000 bopd, has gone down to 74427 bopd.

Ironically the DGPC has not even issued award letter to the successful bidder of two blocks. Two blocks including 28 North and DIK west won by OKTA exploration and production.  However, neither the award letter was issued nor the PCAs were signed so far, said the source. A committee constituted under former Secretary Petroleum has also gave nod for the award of the blocks to OKTA. 

In April 2021, the committee, after in depth discussion decided to award both the blocks to OKTA on the conditions that OKTA will provide bank guarantee equivalent to 100 per cent of work commitments, all financial obligations would be paid in advance through postdated cheques, strict monitoring will be carried out through OCM/TCM to be conducted on quarterly basis, no onerous condition in contrast to Petroleum Policy will be incorporated in the award. However the decision of the meeting has not been implemented by the DGPC.

Explaining the reason for slow pace of exploration work, the source said that Directorate General of Petroleum Concession is not dealing the matters related to exploration actively. For example the source said that Director Exploration who is a geologist has been sidelined and director production has been tasked to take care of exploration matters. Director Production, a Chemical Engineer has nothing to do with concessions at exploration stage, said the source. Perhaps Director Production, a Chemical Engineer belongs to DG Oil department not to DGPC.  All the matters related to exploration is being directed to Director Production instead of Director Exploration, said the source. The oil and gas production industry has been screaming out to appoint petroleum engineer who understands enhanced oil and gas recovery but no one cares on indigenous production, said the source.

Article source: https://nation.com.pk/26-Jul-2021/petroleum-div-fails-to-sign-pcas-for-three-blocks-despite-six-months-passage