:: Oil & Gas Law in Pakistan

HISTORY

Petroleum (L. petroleum, from Greek , lit. "rock oil", first used in the treatise De Natura Fossilium published in 1546 by the German mineralogist Georg Bauer, known as Georgius Agricola[1]) or crude oil is a naturally occurring, flammable liquid found in rock formations in the Earth consisting of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds.



Composition

The proportion of hydrocarbons in the mixture is highly variable and ranges from as much as 97% by weight in the lighter oils to as little as 50% in the heavier oils and bitumens.

The hydrocarbons in crude oil are mostly alkanes, cycloalkanes and various aromatic hydrocarbons while the other organic compounds contain nitrogen, oxygen and sulfur, and trace amounts of metals such as iron, nickel, copper and vanadium. The exact molecular composition varies widely from formation to formation but the proportion of chemical elements vary over fairly narrow limits as follows:

ELEMENT PERCENT RANGE
Carbon 83 to 87%
Hydrogen 10 to 14%
Nitrogen 0.1 to 2%
Oxygen 0.1 to 1.5%
Sulfur 0.5 to 6%
Metals less than 1000 ppm
Table: Composition by weight
Oil & Petroleum Bonds

Octane, a hydrocarbon found in petroleum, lines are single bonds, black spheres are carbon, white spheres are hydrogen

Crude oil varies greatly in appearance depending on its composition. It is usually black or dark brown (although it may be yellowish or even greenish). In the reservoir it is usually found in association with natural gas, which being lighter forms a gas cap over the petroleum, and saline water which being heavier generally floats underneath it. Crude oil may also be found in semi-solid form mixed with sand as in the Athabasca oil sands in Canada, where is usually referred to as crude bitumen. In Canada, bitumen is considered a sticky, tar-like form of crude oil which is so thick and heavy that it must be heated or diluted before it will flow.Four different types of hydrocarbon molecules appear in crude oil. The relative percentage of each varies from oil to oil, determining the properties of each oil.

HYDROCARBON AVERAGE RANGE
Paraffins 30% 15 to 60%
Naphthenes 49% 30 to 60%
Aromatics 15% 3 to 30%
Asphaltics 6%
Table: Composition by weight
World Oil Reserves

Most of the worlds' oils are non-conventional.

MINISTRY OF PETROLEUM AND GAS PAKISTAN

The Ministry of Petroleum & Natural Gas is entrusted with the responsibility of exploration and production of oil and natural gas, their refining, distribution and marketing, import, export and conservation of petroleum products and Liquefied Natural Gas. Petroleum & Natural Resources Division was created in April 1977. Prior to that Petroleum and Natural Resources was part of the Ministry of Fuel, Power and Natural Resources. To ensure availability and security of sustainable supply of oil and gas for economic development and strategic requirements of Pakistan and to coordinate development of natural resources of energy and minerals.

INVESTMENT POLICY FEATURES:

  • Equal treatment to local & foreign investors

  • All economic sectors open for FDI

  • Foreign equity upto 100% allowed

  • No Government sanction required

  • Attractive incentive packages

  • Remittance of royalty, technical & franchise fee allowed

  • Network of Export Processing Zones

  • Export Manufacturing Zero-rated

  • Bilateral Agreements :

    • Investment Protection: 47 Countries

    • Avoidance of Double Taxation: 52 Countries

OIL SECTOR

PETROLEUM PRODUCTS SUPPLY AND DEMAND

The petroleum products account for approximately 40 percent of modern energy consumption in Pakistan. Consumption of petroleum products grew sharply during the 1980s at about 7 percent per annum, but slowed to about 2.5 percent during late 1990s and has gained a momentum in 2004-05 of 9.31%. Oil products consumption is highly skewed, with nearly 83 percent in the form of high speed diesel (HSD) and fuel oil (FO). Only 18 percent of the liquid fuel supplies are met from local sources, and the balance is imported in the form of either crude oil or finished products. Over the past three years, gross imports of liquid fuels have averaged 23.1 million tons (MMT) per annum, generating an import bill of some US$ 5.8 billion.

PETROLEUM PRODUCTS CONSUMPTION BY SECTOR (In tones)

Sector 2001-02 2002-03 2003-04 2004-05 Growth Rate
Domestic 334,501 282,521 231,459 192,750 -16.1%
Industrial 1,611,995 1,604,068 1,493,080 1,542,398 -6.1%
Agriculture 225,742 196,747 183,506 142,062 -13.5%
Transport 8,018,777 8,082,273 8,464,042 9,024,783 1.7%
Power 6,305,419 6,019,958 2,739,763 3,452,581 -11.1%
Other Govt. 463,654 266,387 309,263 316,686 -1.8%
Total Consumption 16,960,088 16,451,954 13,421,113 14,671,260 -3.8%
Source: Energy Book 2005, Hydrocarbon Development Institute of Pakistan.

The Petroleum Downstream Market:

Port Facilities: Crude oil, white-oil products, and low sulfur fuel oil (LSFO) are received at the Karachi Port, while LPG and high sulfur fuel oil (HSFO) are received at the Fauji Oil Terminal at Port Qasim. The port facilities are connected to the tankage/storage facilities of the refineries and oil marketing companies (OMCs).

Transportation: Most of the domestic crude oil and petroleum products are moved by road bowzers or tank lorries. The total number of tank lorries is estimated at 14,00016,000, with various capacities (1030 tons) and age, largely owned by private individuals and small firms. The road tanker fleet is used both for short-haul secondary distribution within cities, and medium- to long-haul shipments around the country. Given the apparent high rates set by the government, there is a large excess of tankers, and this oversupply will become more acute when the WOPP is completed in 2004. In addition to the road-tankers fleet, Pakistan Railways (PR) transports mostly fuel oil, and operates 5,400 tank wagons for this purpose. However, its movement capacity is severely hampered by locomotive availability and other rail infrastructure constraints.

REFINING

Pakistan has three older hydro-skimming refineries plus the mid-country PARCO refinery which began operations in 2000 and Bosicor refinery which started operation in 2003. Together the five refineries have a total capacity of 12.82 million tones per annum, and processed 11.33 MMT of crude in the year 2004-05. The refineries produce a full range of products, including lube base oils and asphalt. However, only 60 percent of their production is HSD and FO, resulting in a significant mismatch between refined product output and market profile. Pakistan exports surplus gasoline and naphtha, and is self-sufficient in other petroleum products, such as kerosene and aviation fuels.

How Refining Process Work?

In the oil marketing sector, seven oil marketing companies (OMCs) namely, Pakistan State Oil Limited (PSO), Shell Pakistan Limited (SPL), Caltex Oil (Pakistan) Limited (COPL), Total-Parco Pakistan Limited (TPPL), Attock Petroleum Ltd (APL), Parco-Pearl and Admore Gas Pvt Ltd are operating in Pakistan with an overall market share of 64.2%, 19.9%, 7.3%, 4%, 2.6%, 1.3% and 0.7% respectively. New companies like Bosicor Pakistan Limited, Hascombe storage (Pvt) Limited, Overseas Trading Company, Askar Oil Services (Pvt) and Bakri Trading Company Pakistan (Pvt) Ltd have entered the market in the recent past which is an ample demonstration of the attractiveness of oil marketing business in Pakistan.

Supply And Demand:

HSD (High Speed Diesel) is the main deficit product, with imports of about 4.5 million tons per annum in recent years. Fuel Oil has experienced reduction in demand in the last couple of years because of substitution with natural gas and Hydel power availability. There was a growth of about 5.5% in Gasoline demand in the country during 2004-05, however surplus local production is being exported in the shape of Naphtha by the Refineries. HSD growth rate during the 2004-05 was 5.5% and projected growth for 2005-06 is also 5.5% whereas Fuel Oil growth projected for the year 2005-06 is around 12%. The energy supply demand projections have indicated that total deficit of petroleum products mainly HSD and Furnace Oil will rise to about 8.89 million tons by 2010. 

Availability Of Land For The New Refinery Project:

The federal Government has approved land and incentives for setting up a new state of the art Deep Conversion Coastal Oil refinery at Khalifa Point, at Hub Balochistan near Karachi.

Incentives:

  1. All facilities will be provided as per Export Promotion Zone Authority (EPZA) Rules at Khalifa Point with the modification that land owned by State Petroleum Refining and Petrochemicals (PERAC) for the setting up of Refinery will be provided free of cost as per the requirement of setting up of a refinery, and will be used only for new Refinery and not as Government equity.

  2. There will be no restriction on the import of crude oil.

  3. Crude oil imports will be exempted from customs duties and taxes (all other incidental charges associated with the import will, however, be applicable).

  4. The Government will facilitate installation of supporting infrastructure including Single Point Mooring (SPM), sub-marine pipelines, product pipelines and electric power supply from national grid.

  5. Sales tax exemption will be allowed on the quantity of Petroleum Products exports while sales tax will be applicable on the products marketed locally.

Incentives already available in Petroleum Policy, 1997:

  1. No prior permission is required for setting up a new refinery or for expansion the existing ones.

  2. Import parity price formulated for new oil refinery projects’ prices based on Singapore Mean FOB spot price along with all applicable local charges. There will be no minimum Rate of Return guarantee for new refinery projects.

  3. The limit of 10 – 40% on the rate of return for existing refineries will be removed subject to agreements being executed with the Ministry of Petroleum & Natural Resources covering development and expansion plans.

  4. Other income earned from non-refinery operations can be retained by the refineries.

  5. Import of crude oil will be permitted from any source, subject to price economics after upliftment of local crude oil if so allocated.

  6. Export of surplus products will be allowed freely.

  7. GOP will not give any product off take right guarantee. Refineries shall be allowed to sell products to any marketing company or they can setup their own companies.

  8. Custom/ relevant authorities will accept instructions for release of equipment on the basis of the recommendations of Regulatory Authority. Import duties and taxes will be payable as per applicable SROs.

Terms & Conditions:

  1. The refinery will be designed and constructed in accordance with internationally acceptable technical codes and standards.

  2. The refinery will have the capacity to produce at least 60% middle distillates.

  3. Product Specifications for the refinery will be in accordance with EUR III specifications for both domestic as well as export markets.

  4. There will be no guaranteed return for this new refinery.

  5. The refinery will be required to optimized its own operations and thus responsible for its margins.

  6. The refinery will be free to sell surplus products in the international market at internationally competitive prices.

  7. The proposed refinery location will be declared as Export Processing Zone (EPZ) and the criteria / incentives offered by EPZA will be applicable.

  8. The 80/20 rule (which requires export of 80 percent of total production to foreign countries) applicable for industries established under EPZ rules will be relaxed for this project to attract investment.

  9. The refinery will be completed and commissioned by December 3, 2010.

Evaluation Criteria:

  1. Technical suitability (including experience in implementing an operating oil and gas sector projects, especially petroleum refineries, appropriateness of project execution plan etc.). The potential investor should have sufficient experience in developing and operating similar oil refinery (ies) based on technical standards and including efficiency and stipulation by the best international petroleum industry standards.

  2. Financial soundness (ownership/ shareholding structure, annual revenues etc.). The potential investor should have financial capability and resources sufficient to meet obligations associated with development and operation of the proposed refinery.

  3. Ministry of Petroleum and Natural Resources and OGRA will select the party for setting up the refinery through international competitive bidding, with the objective to bring in quality investors who has ability to set-up a state of the art brand new refinery within the stipulated timeframe.

  4. Investors selected on the above mentioned criteria will have to obtain license from OGRA under OGRA ordinance, 2002.

Pricing formula for new refineries:

  1. The ex-refinery prices will be set on a calendar quarter basis.

  2. The base price for each product will be the 3 month Average of the Singapore Mean Spot Prices as reported in an international Pricing Service. For price setting purpose, the 3 running months date ending on the 14th of the month; immediately preceding the month in which the prices will become effective, will be used e.g. The date for the period September 15th to December 14th will be used to establish the prices effective January 1st.

  3.  All local / landing charges applicable on import of crude oil is allowed to be recovered in the price build-up, calculated as if applicable at the same rate on each refined product. Such local/handling charges currently are:

    1. Letter of credit opening charges, 0.25% of C&F

    2. Marine insurance, 0.11% of C&F

    3. Ocean loss element, 0.5% of the C&F

    4. Wharfage at actual applicable on crude oil

    5. Local Handling Charges applicable on crude oil 0.15% of C&F

  4. Crude imports will be exempt from customs duties and taxes. However, all other incidental charges are payable by the refinery.

  5. The individual product price calculated formula will be as under:

  6. LPG taken at Kerosene plus BTU premium of 5% i.e. 105% of kerosene.

  7. Mogas. Current 80 Ron, 0.4g/l lead quality. Taken at S’pore 92 Unleaded (UL) less 0.5 Cents/AG (CAG) per RON Octane penalty i.e. penalty of 0.5 CAG = $0.21/barrels/RON X 12 RON = $ 21.42/mton.

  8. Premium gasoline. Current 87 RON, 0.63 g/lead quality. Same octane penalty as Mogas i.e. $0.21 x 5 RON - $ 1.05/Bbl.= $ 8.925/mton.

  9. HOBC Current 97 RON 0.84 g/lead quality. Taken at S’pore Mean for 95 UL(Lead penalty considered).

  10. Regular Gasoline: 92 RON, 0.15 g/lead. Taken at S’pore mean for 92 UL.

  11. Premium Gasoline: 97 RON at 0.15 g/lead. Taken at S’pore mean, 97 UL

  12. Kerosene: Taken at S’pore mean, Kerosene.

  13. HSD 0.5% S: Taken at S’pore mean, gasoil 0.5%.

  14. HSD 1.0% S: Taken at S’pore mean, gasoil 1.0%

  15. Fuel oil 180 cst, 3.5% S: Taken at S’pore mean, HSFO 180.

GAS SECTOR:

Natural gas is a source of wealth for Pakistan. It is a clean fuel, there is a large market (and unmet demand), and given the country’s extensive use of fuel oil, the economic benefits of conversion from liquid fuels to natural gas are high.

Supply and Demand:

Pakistan has limited natural gas deposits. At present, recoverable natural gas reserves in Pakistan are 32 Trillion Cubic Feet (TCF) and Reserve to Production (R/P) ratio based on current production of 3.7 Billion Cubic Feet per Day (BCFD) is 23 years. One of the significant developments in local gas market is the increase of natural gas share in primary energy supply mix from about 40% in 1999-2000 to over 52% in 2004-05 in about five years. If the demand/supply trend of past five years is maintained, the R/P ratio reduces significantly necessitating urgent need to increase natural gas supply. The Government of Pakistan has accordingly placed the highest priority to (a) enhance indigenous

Natural gas supplies through intensified exploration efforts, and (b) import natural gas through pipeline from neighboring countries as well as LNG.

Natural Gas Projected Demand:

Sector 2005 2006 2008 2010 2012 2014 2016 2018 2020
POWER 1,546 1,740 1,930 2,055 2,255 2,557 2,557 2,557 2,557
DOMESTIC 450 498 546 594 642 690 738 786 834
COMMERCIAL 66 72 78 84 90 96 102 108 114
INDUSTRIAL 378 419 437 455 485 515 543 569 595
FERTILIZER 435 435 500 500 500 500 500 500 500
CEMENT 30 30 30 30 30 30 30 30 30
CAPTIVE POWER 175 225 271 315 359 403 450 500 550
TRANSPORT (CNG) 44 62 74 80 86 92 98 104 110
COMPANY USE AND UFG 190 243 238 222 206 189 170 150 128
TOTAL 3,314 3,724 4,104 4,335 4,653 5,072 5,188 5,304 5,418

Source: Ministry of Petroleum & Natural Resources

LIQUEFIED PETROLEUM GAS (LPG):

Liquefied Petroleum Gas (LPG) is a colorless, odorless and environment friendly mixture of hydrocarbons (mainly propane and butane) which is gaseous at normal temperature and pressure, and lique fiable under reduced temperature or moderate pressure. A chemical ethyl mercaptan is added to impart a pungent odour for leak detection. Currently about 1600 tons/day LPG is being produced domestically contributing 0.4 % to the total energy supply mix. Because of its characteristics LPG is fast becoming a fuel of choice in the areas, where natural gas distribution network is not available. Currently out of 25 million households in Pakistan, 4.3 million are connected to natural gas network and the rest are relying on LPG and conventional fuels like coal, firewood, kerosene, dung cake etc.

There are eight (8) producers and 42 LPG marketing and distribution companies in domestic, commercial and industrial sector. They get their supplies mostly from the refineries, the gas processing plants, and to a minor extent, through imports

LPG Cylinders

Government of Pakistan has deregulated LPG allocation and prices. The Government therefore does not fix LPG prices for producers as well as consumers with a view to promote healthy competition and to improve safety and service standards. All the new producers of LPG are now free to market their product themselves or dispose it of through any LPG marketing company. 

Import Of LPG And Duty Structure:

 According to government’s import policy, LPG is included in the free list of imports. However for its handling, storage and marketing in Pakistan there is a requirement of license from Oil and Gas Regulatory Authority (OGRA). LPG can be imported through sea and land routs on payment of 5% customs duty. LPG import facility is available at EVTL’s terminal at Port Qasim having storage capacity of 5000 M. Tons.

LIQUEFIED NATURAL GAS (LNG):

Pakistan’s Gas Demand and Supply Projections indicate a widening gap of approximately 600 MMCFD by the year 2010-11.

LNG Process

The gap starts to emerge in 2007-08 and built up to 1000 MMCFD by 2010-11. In order to address the projected shortage, strong emphasis is being laid on importing gas from neighboring gas-producing countries, through cross-border gas pipelines and also in the form of liquefied natural gas (LNG). It is expected that LNG receiving, storage, re-gasification, and distribution infrastructure, for the distribution and sale of regasified LNG in the domestic market, will be installed in the near future, and expanded periodically, as necessary.

COMPRESSED NATURAL GAS (CNG):

CNG Components

Government of Pakistan is encouraging the use of Compressed Natural Gas (CNG) as an alternate fuel for automotives in order to control environment degradation, save foreign exchange in import of liquid fuels and generate employment. Due to Government‘s encouragement, Pakistan has become third largest CNG user in the world. Total CNG stations and vehicles converted to CNG upto end of financial years 2003-04 and 2004-05 are given as under:

CNG Activity By the end of 2003-04 By the end of 2004-05 % Increase / Decrease
Total operational CNG station till end of financial year (F.Y.) 546 732 34.1
Vehicles converted to CNG 500,000 750,000 50.0
Total No of provisional licences issued till end of financial year 1486 2100 41.3

Companies Operating In Oil & Gas (Upstream):

COMPANY COUNTRY
Hycarbex Inc. United States of America
PAIGE Limited (PAIGE) United States of America
BP Pakistan Exploration & Production United States of America
Premier Oil Pakistan United Kingdom
Tullow Pakistan (Developments) Ltd. United Kingdom
NATIVUS Resources Limited United Kingdom
Rally Energy Pakistan Ltd. Canada
Shell Exploration Offshore Netherlands
BHP BILLITON Australia
ENI Pakistan Ltd. Italy
MOL Oil & Gas Company B.V. Hungary
OMV Pakistan Inc. Austria
Petronas Carigali (Pakistan) Ltd. Malaysia
Polish Oil & Gas Company Poland
Pakistan Oilfields Ltd. Pakistan
Oil & Gas Development Company Ltd. Pakistan
Mari Gas Company Ltd. Pakistan
Petroleum Exploration (Pvt.) Ltd. Pakistan
Orient Petroleum Inc. Pakistan
Pakistan Petroleum Ltd. Pakistan
RDC International (Pvt) Ltd. Pakistan
Saif Energy Limited Pakistan

OIL - Current Summary of Wells in Operation:

Company Total Wells (Province wise) Production (BOPD)
    Sindh Punjab Balochistan  
Oil & Gas Development Co. 21 11 10 - 20430.25
Orient Petroleum Inc. 3 - 3 - 1061.09
Pakistan Oilfields Ltd. 9 - 9 - 10711.3
Pakistan Petroleum Ltd. 4 - 3 1 4290.71
BHP Billiton 1 1 - - 1695.52
BP Pakistan E&P 43 43 - - 25877.21
Lasmo Oil Company Ltd. 2 2 - - 401.08
TOTAL 83 57 25 1  
Well Digging Mechanism

GAS - Current Summary of Wells in Operation:

Company Total Wells (Province wise) Production (MMCFD)
    Sindh Punjab Balochistan  
Oil & Gas Development Co. 13 5 6 2 687.36
BP Pakistan E&P 46 46 - - 234.67
Pakistan Oilfields Ltd. 6 - 6 - 42.41
Pakistan Petroleum Ltd. 4 2 1 1 772.93
Orient Petroleum Inc. 4 1 3 - 18.76
OMV Pakistan Inc. 2 1 1 - 531.6
BHP Billiton 1 1 - - 247.93
ENI Pakistan Ltd. 2 2 - - 367.1
Mari Gas Company Ltd. 1 1 - - 446.13
Tullow Pakistan Ltd. 2 1 1 - 16.53
Petroleum Exploration Ltd. 1 1 - - 11.15
TOTAL 82 61 18 3  

LAWS REGULATING THE PETROL AND GAS IN PAKISTAN:

There are certain laws which deal with the petrol and gas in Pakistan. The purpose of these laws is to regulate the production, refining, blending, import, storage and marketing of the petroleum products in the whole of Pakistan as well as in the world.

  1. Liquefied Natural Gas LNG POLICY 2006

  2. LPG Production and Distribution Policy 2006

  3. National Mineral Policy (NMP) 1995

  4. Natural Gas Allocation and Management Policy 2005

  5. Petroleum Exploration & Production Policy 2001

  6. Petroleum Policy 1997

  7. Petroleum Policy 2007

Pakistan Offshore Petroleum (Exploration and Production) Rules, 2003:

The rules determine the steps and procedure for petroleum products on offshore areas. Offshore area means all the areas that lies completely seaward from the high water mark within the jurisdiction of Pakistan, and includes all areas within the territorial waters, the historic waters, the contiguous zone, the continental shelf and the exclusive economic zone as defined in the Territorial Waters and Maritime Zones Act, 1976.

The Liquefied Petroleum Gas (Production and Distribution) Rules, 1971:

The object of the rules is to make rules for the regulation of Mines and Oilfields and Mineral Development. It includes the production, liquefaction, separation,

stripping, transmission, processing, storage, filing or distribution of LPG. For the working of all these functions, corporation is entitled to a license.,

PETROLEUM POLICY 2007:

The Government of Pakistan (GOP) is committed to accelerate an exploration and development programs order to reverse the decline in crude oil production, to increase the domestic gas production and supply and to reduce the burden of imported energy which otherwise will have adverse effect on the balance of payments & trade.

The principal objectives of this Policy are:

  1. To accelerate E&P activities in Pakistan with a view to achieve maximum self sufficiency in energy by increasing oil and gas production.

  2. To promote direct foreign investment in Pakistan by increasing the competitiveness of its terms of investment in the upstream sector.

  3. To promote the involvement of Pakistani oil and gas companies in the country's upstream investment opportunities.

  4. To train the Pakistani professionals in E&P sector to international standards and create favorable conditions for their retaining within the country.

  5. To promote increased E&P activity in the onshore frontier areas by providing globally competitive incentives.

  6. To enable a more proactive management of resources through establishment of a strengthened Directorate General of Petroleum Concessions (DGPC) and providing the necessary control and procedures to enhance the effective management of Pakistan's petroleum reserves.

  7. To undertake exploitation of oil and gas resources in a socially, economically and environmentally sustainable and responsible manner.

The Petroleum Products (Development Surcharge) Ordinance 1961:

The purpose of the Ordinance is to provide for the levy and collection of a development surcharge on petroleum products and for matters connected therewith.

Every refinery and every company shall pay to the Central Government a development surcharge equal to the differential margin in respect of petroleum products produced or, as the case may be, purchased by it for resale except for export.

Any amount or arrears due as development surcharge and not paid within the time allowed by the Central Government or any officer, authorized by it in that behalf shall be recoverable as arrears of land revenue.

The Central Government, in such general cases as it may prescribe by rules or in particular cases by special order may grant exemption from development surcharge to refinery or company on such conditions, limitations or restrictions as it may think fit to impose.

The Marketing of Petroleum Products (Federal Control) Act, 1974:

The aim of the act is to provide for the management and development of marketing facilities in petroleum products.

The Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971:

The purpose for the making of these rules is the regulation of Mines and Oilfields and Mineral Development.

COMPRESSED NATURAL GAS (CNG)

Natural gas is an important source of energy not only for domestic purpose but also for Commercial purposes. About 54% of the energy sources are meet through it.Pakistan's total remaining gas reserves are estimated at 28. 51 TCF as on 30-06-2005 which are adequate for meeting gas requirement of Pakistan for 19 years at current rate of production. Pakistan possesses a well developed extensive system of gas supply, developed in Pakistan through Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).

NEW POLICY FOR ISSUANCE OF NOCs FOR INSTALLATIONS OF CNG STATIONS

The Federal Government has recently introduced the following policy regarding issuance of NOCs for installation of CNG stations:

For installation of a CNG station at existing petrol pumps, there is no need of any additional NOC except from the Department of Explosives and Third Party certification from HDIP including a reputable Private Sector Company of high standards.

For installation of a stand-alone CNG station at raw sites/new locations, NOCs only from the following authorities be obtained: Gas utility Company, Department of Explosives, Civil Defence, Tehsil Municipal Officer, and Third Party certification from HDIP including a reputable Private Sector Company of high standards.

All authorities concerned must decide for issuance of NOC(s) or otherwise within one month of the receipt of request.

SETTING UP OF CNG STATION: No person can set up CNG station without first obtaining license from the Authority i.e. Oil and Gas Regulatory Authority Islamabad under Rule 6 of CNG (Production & Marketing) Rules, 1992. Initially OGRA issues provisional license for a period of 2 years for setting up CNG station. After obtaining provisional license from the authority, the licensee is supposed to start construction of the station and also obtain NOCs from the local authorities and a license from DEPARTMENT OF EXPLOSIVES on Form B.

CNG MARKETING LICENSE: After completion of CNG station, the authority under Rule 7 of CNG Rules 1992, issues fifteen years Marketing License subject to submission of following documents: a. Valid explosive license on form B. and b. Satisfactory report of 3rd party inspector regarding construction of CNG works by the party in accordance with the CNG Rules

TYPE OF MACHINERY/EQUIPMENT ALLOWED FOR CNG: Only approved CNG equipment/ machinery can be imported and installed at CNG stations approved by the competent authority as amended from time to time. List of authorized Equipments

CNG RULES 1992: Government has promulgated CNG Rules 1992 for regulation of all CNG activities. The rules provide for the procedure for setting up CNG stations and safety code for practice etc. CNG RULES 1992

Liquefied Natural Gas LNG POLICY 2006

National Mineral Policy (NMP) 1995

The Government of Pakistan is cognizant of the role of mineral industry in the overall economic and social development of the country and its importance in industrial and export promotion. It is also conscious of the unique characteristics of the mining industry like highly risk prone, capital intensive and subject to global competition with high volatility of prices. To harness the fairly adequate mineral potential with national and international investment, the Government of Pakistan has formulated National Mineral Policy offering appropriate institutional arrangements at federal and provincial levels; time bound investment friendly regulatory regime and internationally competitive fiscal incentives.

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