ISLAMABAD - Objecting to transfer of operatorship of Pakistan’s biggest oil and gas block to a private company, the provincial government of Balochistan has asked the centre to disallow the firm to operate in the area till resolution of all outstanding issues.

“New operator may not be allowed to operate till settlement of all issues about Block 28. The company should also get an NOC from the government of Balochistan,” asked the provincial government to the centre.

Official sources told The Nation that the objection was raised by the provincial government in a meeting of a joint working group held earlier this month.

In order to address Balochistan’s concerns regarding Sui lease and other oil and gas issues, the federal and provincial governments had constituted a joint working group (JWG). The JWG comprised representatives from federal and provincial governments.

Block has gas reserves of more than 22 trillion cubic feet that is almost equal to country’s entire proven reserves

On March 7, the first meeting of the JWG was held wherein issues pertaining to Block 28, comprising Kohlu, Sibbi and Loralai districts of Balochistan, were discussed. Block 28 is estimated to have natural gas reserves of more than 22 trillion cubic feet (tcf) which is almost equal to the country’s entire proven reserves. More than 15.4tcf reserves are recoverable. The block, having area of 5856.71 Sq Km, was originally awarded in 1991 (27 years ago) to Tullow, a British company. Tullow was operator of the block having 95 percent working interest with OGDCL having 5 percent as joint venture partner. The exploration work could not be started since grant of the block as Tullow declared force majeure with effect from date of grant, which has not been lifted till now.

The operatorship of the block was transferred to OGDCL in July 2016 with condition that OGDCL will lift the force majeure within 90 days. However, OGDCL too was not able to commence the work except carrying out a reconnaissance 2D seismic survey in 2017.

The OGDCL several times requested for a security clearance. However, the area could not be cleared by security agencies. In June 2018, during the interim government, Mari Petroleum Company Limited (MPCL) acquired the working interest of Tullow in the block followed by transfer of operatorship from OGDCL to MPCL. Interestingly a state-owned OGDCL left the working interest to a private company, as it failed to get NOC, and within months the private company has geared up for a 3D seismic survey in the area. However, representatives of Balochistan, during the joint working group meeting, were of the view that there was no justification for a 27 years long unprecedented force majeure for a company and subsequent transfer of operators without the consent of the provincial government. They said the new operator should not be allowed to operate till settlement of all issues on Block 28. The operator should also get an NOC in writing from the provincial government for conversion to Petroleum Policy 2012 from 1991 policy, they demanded.

Government of Balochistan has said such a prolonged situation of force majeure is not permissible under rules and therefore ideally the exploration licence should have been cancelled/ revoked for a fresh bidding of the block. The government of Balochistan also resented that change in operatorship from OGDCL to MPCL should have been done with prior consent of the provincial government.

Balochistan has also demanded that Block 28 should be converted to  Petroleum Policy 2012 and it should be split into three separate blocks of 2500 Sq Km as per the policy. Balochistan desires that the province through Provincial Holding Company (PHA) be given one block of Block 28 without resorting to competitive bidding as allowed by CCI.

During the meeting, DGPC was of the view that Petroleum Concession Agreement(PCA) allows the licence holders to declare force majeure and that there was no maximum time limit for such force majeure.

They further said that since option for conversion to 2012 policy was not exercised by the license holders. The said option was to be exercised within 90 days of the announcement of the policy, therefore, conversion of the block to 2012 policy was not tenable at this belated stage. Moreover, conversion was an option to be exercised by licence holders and the government could not force them to convert.

Balochistan also rejected DGPC’s assertion that the joint and equal vesting of mineral oil and nature gas under Article 172(3) of the Constitution was subject to existing commitment and obligation and therefore all petroleum rights granted prior to 18th Amendment were not subject to any involvement of provinces. The provincial government is of the view that their proactive role and involvement in all matters regarding lincensing and leasing in petroleum sector be ensured.

The government of Balochistan has clearly stated that unless the federal government has an agreement with the province on existing arrangements, force majeure, shifting of operators and 1991 policy the operatorship of Block 28 cannot be transferred to new company.

Meanwhile, a source told the scribe that the government should investigate the matter that how the exploration rights of biggest proven oil and gas reserves in the country were transferred from the state-owned company to a private firm and that too during an interim government.