Islamabad, January 18, 2025 – The longstanding monopoly of Sui gas companies in the purchase and sale of gas has officially ended as the Petroleum Division notified the implementation framework for third-party gas sales. This landmark move, endorsed by the Executive Committee of the National Economic Council (ECNEC), allows private companies to purchase up to 100 mmcfd of gas annually, with a cap to be reviewed yearly.
The decision stems from amendments to the 2012 Exploration and Production (E&P) Policy, approved by the Council of Common Interests (CCI) on January 26, 2024. Under this policy, E&P companies can sell up to 35% of their pipeline-specification gas directly to private parties holding OGRA licenses through competitive bidding, bypassing government approval. Prices for third-party sales must match or exceed wellhead gas prices outlined in the 2012 Petroleum Policy.
This framework applies to existing licenses and leases under E&P Rules 1998, 2001, 2009, and 2013 for gas discoveries not yet allocated. Provinces hosting wellheads will be prioritized in line with Article 158 of the Constitution.
The liberalization of the gas sector is expected to alleviate the liquidity crisis faced by E&P companies, which has reached Rs. 1,500 billion due to delayed payments from Sui companies. By allowing private-sector transactions with timely payments, the circular debt burden could be significantly reduced.
E&P companies have committed to investing $5 billion in Pakistan’s oil and gas sector, contingent on the policy’s implementation. Effective from January 9, 2025, the new framework also includes provisions for regular reviews to incorporate technological advancements.
A proper Gas Sale Purchase Agreement (GSPA) will govern transactions between private buyers and E&P sellers, covering regulatory, commercial, and technical details. To ensure transparency, competitive bidding processes will be widely advertised, including invitations for international bids.
This initiative not only enhances cash flow and investment opportunities in the E&P sector but also increases government revenue through royalties, taxes, and windfall levies. The private sector’s flexibility in using the Sui network, laying independent pipelines, or employing virtual pipelines further underscores the sector’s liberalization and growth potential.
Story by Khalid Iqbal
