Petroleum Policy Of Pakistan

it provides package for both the upstream as well as downstream activities.

It covers mobilization of greater resources and promoters private sector investment for enhancing domestic oil and gas production.

Improved incentives package, procedure, regulatory frame work and transparency are the key features of 1997 - Petroleum Policy.

Initiative has been taken and further efforts are underway to attract private investment in improving oil & gas infrastructure as well as its distribution.

No government permission required for setting up refineries.

Import parity price formula based on Singapore mean.

Import of crude oil from any source will be allowed.

Export of surplus products will also be allowed.

3 MNCs (PSO, Shell, Caltex) are marketing petroleum products.

2 new companies (Attock Petroleum and PARCO - Total) have also be allowed for marketing pet. products.

Investment Policy covers oil refining and manufacture of petroleum products under Hi-Tech category. This import of PME is allowed at zero-rated customs duty and FYA @ 90% of PME cost is available.

A new Offshore Prospectivity Zone 'O' created to provide following incentives for offshore E&P :

Agreement : Production Sharing Contract.

Royalty : 0% for first 4 years of Commercial Production rising to 5% in year 5, 10% in year 6 and 12.5% thereafter.

Cost Recovery : Limited to 85% including royalty of 12.5%.

Corporate Tax : capped at 40% (compared to 50-55% for Onshore).

Import duties and taxes to be zero for exploration and 3% after the first commercial discovery.

Production Bonuses :

US$ 1 million at start of Production (within 90 days).

US$ 2 million upon reaching 200 MMcfd or equivalent.

US$ 5 million upon reaching 600 MMcfd or equivalent.

Oil & Gas Price : Same as Petroleum Policy 1994.

A Green Area Map has been identified where no clearance would be required for concession blocks falling inside the green areas.

All applications for exploration licences are decided within 60 days. Applications, which are contested, may take up to 120 days but no more.

The Government of Pakistan would institute programs like basin studies, geological/ geo-chemical studies, seismic surveys etc., directly on a multi-client basis, through services contractors.

OIL & GAS

10 Year Road Map for Private Investment

Deregulated oil and gas sector completely. Government to be responsible only for policy formulation.

Increase number of exploratory wells per year from current 15 to 100.

Increase oil production from current 56,000 to 100,000 barrels per day

Increase gas production from current 2.4 to 5.0 billion cubic feet per day.

Reduce import of refined products to 90% of total consumption. This will require additional refining capacity of above 6 million tones per year. Eliminate imports of fuel oil.

Construct cross-country oil pipelines to introduce efficiency and reduce burden on roads.

Increase oil storage capacity from current 19 days cover to 45 days.

Strengthen R&D support to the Government.

Eliminate lead in gasoline. Reduce sulphur in diesel oil from current 1% to 0.05%. Promote CNG for diesel oil substitution.

Encourage trans-boundary trade of clean energy (natural gas) and promote regional energy cooperation in South Asia.