Islamabad- The Federal government and government of Balochistan have yet to resolve the issue pertaining to the signing of Development and Production of the Sui Lease even after the passage of more than five years of the expiry of the lease in July 2015. 

A committee comprising of the Federal and Balochistan government representatives will meet tomorrow (Tuesday) to attempt the resolution of the Sui mining lease issue which is on temporary extensions since 2015, official source told The Nation here. The matter regarding 69 per cent of the Sui Field is almost resolved however the negotiations regarding the remaining 31 per cent will be held between the federal, provincial and PPL representatives, the source maintained.  

PPL claims that the 31 per cent share in Sui belongs to their shareholders, the source said and added that the government of Balochistan is not ready to buy the claim and wants resolution of 100 per cent of the Sui field. The source said that they are ready to pay to the existing employees of the Sui field. PPL should resolve the matters related to the shareholders of the company, the source added.

Sui Mining Lease issue is pending since 2015, temporary extensions being granted after every 6 months, and the government of Balochistan is demanding that it should be resolved according to the Article 172(3) clause. “Subject to the existing commitments and obligations, mineral oil and natural gas within the Province or the territorial water adjacent thereto shall vest jointly and equally in that Province and the Federal Government.” said Article 172(3) of the constitution.

The government of Balochistan had time and again questioned the legality of Pakistan Petroleum Limited (PPL) operations - through SROs - in Sui gas field as the previous government of PML (N) had extended the lease for one year without signing Development and Production Lease with the province. The government of Balochistan has been demanding the federal government for the past five years to sign Development and Production Lease with the province under Petroleum Policy 2012. The Memorandum of Agreement (MOA) between the federal and Balochistan government regarding PPL extension of Sui lease was signed in May 2016 but since then it is being operated on temporary basis, through issuing of SROs, official source said. 

Under the MOA, the Mining Lease (ML) shall be converted to Development and Exploration Lease (D&PL) and shall be extended under the pursuant to the Petroleum and Exploration and Production Policy 2012 and Pakistan Onshore Petroleum (Exploration and Production) Rules 2013, the official maintained. Now PPL has to sign the Petroleum Concession Agreement (PCA) with the government of Balochistan and is required to provide field development plan, federal government was required to sign an agreement with the government of Balochistan prior to the expiry of the extension, the official said.

Consequent upon the expiry of Sui Mining Lease it was decided that Sui Gas Field would now be governed by Petroleum Policy 2012 and Petroleum Rules 2013. For this purpose, an MoA was signed between the federal government and Balochistan government. Under the MoA, the lease will be extended for 10 years and it was required to execute Petroleum Concession Agreement and Development & Production Lease and on the basis of these documents a development plan for production of Oil and Gas has to be approved.

The Balochistan government has several reservations over the draft agreement prepared in this regard. For example, it has been laid down under the Article 4.1.3 (6) of Petroleum Policy 2012 that the Federal Government Holding and Provincial Holding Company of Balochistan will be entitled to 2.5 perc ent share each in the license/D&P Lease to be executed under policy 2012. Provision R of signed MOA states that PPL shall invest Rs20 billion in exploration activities in Balochistan during lease period. The draft agreement prepared by DGPC in consultation with PPL is silent about this shareholding which it is feared will incur colossal pecuniary loss to Balochistan. PPL has been shown 100 per cent owner of D&P Lease in contravention of Petroleum Policy 2012.This arrangement is also in conflict with article 172(3) which reads as under: “Subject to the existing commitments and obligations, mineral oil and natural gas within the province or the territorial waters adjacent thereto shall vest jointly and equally in that province and the federal government.” Provision D of MOA states that the Development and Production Lease (D & PL) shall be executed by the government of Pakistan and government of Balochistan subject to policy.

Similarly, the allocation of gas is also not in line with article 158 which reads that, “The Province in which a well-head of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from that well-head, subject to the commitments and obligations as on the commencing day”. Although this provision has been incorporated in MOA (Allocation of Gas will be done as per the applicable policy and rules, subject to 158 of the constitution of Pakistan), but has been very cleverly omitted from the draft Petroleum Concession Agreement.