Government Approves Sale of 35% Gas Output to Private Parties

Gas-OGDCL

Islamabad – The government has issued a statutory order (SRO) permitting exploration and production (E&P) companies to sell up to 35% of newly discovered gas reserves to private entities. This marks a significant increase from the previous cap of 10%, with an annual ceiling of 100 mmcfd.

The decision, facilitated by the Special Investment Facilitation Council (SIFC) and a committee led by Deputy Prime Minister Ishaq Dar, resolves a prolonged standoff with state-owned gas companies. E&P firms had expressed concerns over cash flow challenges caused by non-payments from government-run gas distributors, hindering investment in new projects.

Key Details:
Private Sales: E&P companies can now sell up to 35% of their share of pipeline-specification gas to third parties licensed by OGRA. Sales must occur through competitive bidding, with prices not falling below wellhead rates under the Petroleum Policy 2012.
Infrastructure Options: Buyers can utilize existing Sui gas networks, construct their own pipelines, or opt for virtual pipelines for transportation, adhering to regulatory requirements.
Background: The policy shift stems from a Council of Common Interests (CCI) decision under the caretaker government in January 2024, aimed at encouraging investment by easing cash flow constraints for E&P firms.
The SRO empowers E&P firms to engage private buyers without prior government approvals, streamlining operations and fostering growth in the hydrocarbon sector. This move is expected to attract fresh investment, boost production, and enhance energy sector efficiencies.

Related posts