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Karachi, August 28, 2012 (PPI-OT): The government has unveiled the Petroleum Production and Exploration Policy 2012 in which the wellhead gas prices for Exploration and Production (E and P) companies have been raised from existing USD 4 per mmbtu to USD6.0 -USD 9.0 per mmbtu to attract more investment in this sector.
According to Alfalah Securities Limited, the wellhead gas price for E and P companies in zone III onshore would be USD 6 per mmbtu, for Zone-II USD 6.3 per mmbtu and for zone I USD 6.6 per mmbtu. While the gas price for offshore shallow zone will be USD 7 per mmbtu, USD 8 per mmbtu for Offshore Deep Zone and USD 9 per mmbtu for Offshore Ultra Deep Zone. This is done to expedite exploration activity and make available more gas to meet the gas shortfall. However, the increase in wellhead gas price would result in increase in consumer gas prices and the government would not provide subsidies on gas except lifeline consumers.
The government has reduced windfall levy from 50% to 40% and the base price of crude oil and condensate for windfall levy has been increased from USD 30/barrel to USD 40/barrel; which will go up by US USD 0.5/barrel in each calendar year. Gas pricing ceiling of USD100/barrel replaced with USD110/barrel. 5% carried interest (Government Holding 2.5%, Provincial Government Holding 2.5%). The renewal of lease after expiry of lease term will be subject to payment of an amount of 15% of the wellhead value for another 5 years. Sale of 90% shares of pipeline specification gas to Government of Pakistan and 10% by E and P companies to any buyer with prior consent of government. A bonanza of USD 1/mmbtu shall be given for first three discoveries in offshore area.