Accepting the long standing demand of oil and gas producing provinces for ensuring absolute transparency in the exploration and production of crude oil and gas, federal government is putting in place modern technology based real-time data gathering system. In the recently held meeting of Council of Common Interest (CCI), Khyber Pukhtunkhwa government had pressed the demand of royalty payment on crude oil production to the province, which has not been paid for the past 10 years. The province has claimed this payment for the production of 50,000 barrels per day of crude oil. Under Article 161 of the Constitution, federating units are entitled to get royalty payments for oil and gas production and net hydel profits for hydel power genreration. They have been persistently urging the federal government for the use of modern technology for regularly monitoring of oil exploration and production activities for real-time data sharing to bring transparency for the calculation of taxes and duties and transfer of their share from the revenue thus collected. The CCI had agreed to devise a system for real-time monitoring and gathering of data on oil and gas production and allocation. The system will be developed by the US Petroleum Company LMKR. Crude oil and petroleum products import bill of the country had gone up To $14 billion in FY-19. It will substantially increase if the country enters second phase of industrialisation and if the dream of setting up special economic zones come true. Currently, for meeting the requirements of sluggish economy, Pakistan is compelled to import crude oil and petroleum products under deferred payment facility from Saudi Arabia. The growing future demand not only necessitates expanding oil exploration and production but also setting up new oil refineries and modernisation of existing outmoded ones to enlarge the inexpensive offshore oil storage facilities. Installation of state-of-art real-time data monitoring system in the Petroleum Division is inevitable. Taking cognizance of fast growing future demand of oil and gas, Council of Common Interest (CCI), in its earlier meeting, had approved an incentive package for oil and gas exploration and production companies in the high risk zones of Baluchistan and tribal districts of Khyber Pukhtunkhwa. It may be recalled that in March Prime Minister Imran Khan had given an approval in principle which included offering better prices to oil and gas exploration companies in the risky areas of two small provinces. Oil and gas exploration work remained at standstill during the five years tenure of last PML-N government. The entire focus was on import of these products which accounted 30 percent of current account deficit of $35 billion. The PPP government in Sindh had lambasted the PML-N government in the center for not carrying out bidding rounds for new petroleum concessions till the completion of its tenure of government in 2018.
The last bidding round was held in March 2013.
The government of provinces with rich reserve of oil and gas had all along complained against the PML-N federal government failure to auction exploration blocks which hindered the exploration and production of oil and gas. The production from the already operational oil and gas wells was not increased in Khyber Pukhtunkhwa and Sindh, causing losses of billions of rupees in royalty to these provinces. It is worth mentioning that in Khyber Pukhtunkhwa not even a single block had been put up for auction since 2014 out of 35 identified sites. The lease agreements which were struck before 2012 had expired and no effort was made to renew them. This deliberate neglect caused a loss of Rs.20 billion in royalty earning to the federal government and Rs.8.8 billion to the provincial government.
The most appreciable work of oil and gas exploration had been done during 2000-07.Significant discoveries had been made in four Southern Districts of Khyber Pukhtunkhwa. The succeeding governments neglected oil and oil gas exploration and production in areas of proven reserves.
