In the 2012 petroleum policy, the government has announced incentives and higher prices for exploration companies to boost oil and gas exploration and overcome energy shortage that has engulfed the entire economy. The lucrative incentives are expected to bring investment in petroleum exploration and production.
In the new policy, well-head gas price has been set at $6 per Million British Thermal Unit (MMBTU) for Zone-III, $6.3 for Zone-II and $6.6 for Zone-I. It provides a comprehensive pricing mechanism for Zone-0 with $7 per mmbtu for shallow wells, $8 for deep wells and $9 for ultra-deep wells.
Before the launch of 2012 policy, the government announced petroleum polices in 2007 and 2009 but these polices were not implemented, in the meanwhile some of the exploration and production companies discovered gas and asked the government to give them wellhead gas price as per 2012 policy, but the government rejected the requests, saying that they will get wellhead gas prices as per respective policies.
Official documents available with Business Recorder revealed, "In exercise of the powers conferred by clause 1(i) of entry 23 to Schedule-II of Rules of Business the Federal Government is pleased to direct that the following amendments shall be made in the Petroleum Exploration and Production' Policy 2012 notified vide SRO number 1078(I) 2012 dated August 30, 2012, namely:-In Section VI of the aforesaid. Policy: (a) In paragraph 13 for sub-paragraph 13.2 the following shall be substituted:
"13.2 For the purpose of this section new exploration efforts mean 'Exploration Wells' under drilling and/or spaded, after the Effective Date of the Petroleum Exploration and Production Policy, 2007."; (b) In paragraph 13 for sub-paragraph 13.3 the following shall be substituted; "13.3 For all conversions pursuant to paragraph 13.1 of Section VI of the Petroleum Policy 2012, the gas price allowed for new exploration effort under the respective exploration licences and leases shall be as under:
For all the exploratory efforts made between 27.11.2007 and 19.3.2009. Price as provided in Petroleum Policy 2007 for conversion regime. For all the exploratory efforts made between 20.3.2009 and 29.8.2012. Price as provided in Petroleum Policy 2009 for conversion regime. For all the exploratory efforts made after 30.8.2012. Price as provided in Petroleum Policy 2012 for conversion regime The above indicated applicable pricing regimes will be made effective from the date of discovery of respective field irrespective of execution of Supplemental Agreement."
In paragraph 13 for sub-paragraph 13.6 the following shall be substituted:
13.6 The conversion under this policy will be opted as a package and the companies desirous of opting for conversion to this Policy shall be required to submit their written request to DGPC within 90 days from the date of announcement of the policy failing which they will into remain eligible for the conversion. Similarly, for those blocks for which the exploration licences have not yet been granted and PCAs/PSAs have not been executed as mentioned in sub-paragraph 13.1 (b) and (c), the company concerned will have the option to apply, in writing, for conversion under this policy within 90 days from the date of grant of such block. The option once exercised shall be final";