Latest news with #PakistanPetroleum(ExplorationandProduction)Rules
Express Tribune
27-07-2025
- Business
- Express Tribune
Govt issues show-cause notice to energy firms
Listen to article The government has served a show-cause notice on Spud Energy Limited and Frontier Holdings Limited over alleged change in ownership and effective control without prior government approval. The Directorate General of Petroleum Concessions (DGPC), Ministry of Energy (Petroleum Division), has issued the notice for an act that may constitute violation of petroleum rules. The Petroleum Division is of the view if there is any change in a company ownership or board, it is necessary to obtain approval from the division. The aim of this is to ensure that new owners or board members do not include citizens of countries hostile to Pakistan, such as India or Israel, as such individuals pose security risk. For instance, if a foreign company, whose subsidiary is operating in Pakistan, undergoes such changes, it can become a security threat to the country. According to the official notice dated July 18, 2025 issued to Spud Energy, Frontier Holdings and their parent company Jura Energy Corporation, which is available with The Express Tribune, the DGPC noted that a 73.3% controlling stake of Jura Energy was reportedly transferred by Phoenix Exploration to IDL Investments Limited, an entity registered in the British Virgin Islands. The transaction, which took place on March 6, 2025, was not officially reported to DGPC prior to or following its execution. "Any disposition of shareholding or effective control without prior consent of the government is a violation under Rule 68(d) of the Pakistan Petroleum (Exploration and Production) Rules, 1986 and Rule 69(d) of the 2001 rules," the notice read. DGPC said that under the rules, companies holding petroleum rights are bound to disclose any fresh issues of capital, changes in ownership and alterations to their corporate structure. These reporting obligations, the notice said, were not fulfilled in this case. "The transaction may have led to shareholding/structural changes, which may impact effective control and, as such, should have been reported to this directorate and sought necessary approvals," the DGPC stated. It added that it had been informed of the transaction via a third-party letter dated May 2, 2025. DGPC has now demanded comprehensive documentation and justification within 30 days from Spud Energy, Frontier Holdings and Jura Energy. The companies have been asked to provide full details of the shareholding structure of involved entities – IDL, Phoenix, Jura Energy, PetExPro, Frontier Holdings and Spud Energy – before and after the transaction. Other requirements include disclosure of new board appointments, shareholder voting patterns, tax filings, transaction value and whether capital gains or withholding taxes were paid in Pakistan. In particular, the DGPC sought to understand how the 2025 transaction differs from a 2012 case, where it had granted no-objection certificate for a similar change in Frontier Holdings' control from Jura Energy to Eastern Petroleum Limited, Mauritius. Failure to respond within the stipulated timeframe may result in punitive measures, including the "revocation of petroleum right," the notice warned. The companies have also been given the option to appear before the authority for personal hearing, should they so desire. 'No need for govt nod' Meanwhile, Jura Energy said that on March 6, 2025, Phoenix Exploration, a former shareholder of Jura Energy, completed the sale of all its outstanding common shares in Jura to IDL Investments, a British Virgin Islands-based investment entity. The shareholding sold represented a 73.3% interest in Jura. As Jura is a publicly listed company on the Toronto Stock Exchange, the transaction was publicly disclosed upon completion, in accordance with the applicable securities' regulations. In a letter written to the Ministry of Energy, Jura said that while applying the 1986 rules to Kandra development and production lease, the requirement to seek the government of Pakistan's approval does not arise since the transaction did not result in change in control of the holder as PetExPro continues to be its parent company. It said that the transaction complies fully with Pakistan's regulatory requirements and no breach of law or regulation has occurred.
Business Recorder
21-05-2025
- Business
- Business Recorder
‘Discrepancies in OGDCL real-time data': Concerns mount about accuracy of royalty payments to provinces
ISLAMABAD: Concerns about the accuracy of royalty payments to provinces are mounting due to discrepancies in the Oil and Gas Development Limited (OGDCL)'s real-time production and sales data. This issue is exacerbated by the absence of a verification mechanism within the Petroleum Division, potentially allowing the company to benefit from unaudited data. This was revealed in the Public Accounts Committee (PAC)'s sub-committee meeting which examined the Ministry of Energy (Petroleum Division) Audit Report 2010 and 2013-14. Seven new exploration blocks: OGDCL secures provisional award In one case, audit identified short payment of royalty of Rs467.47 million due to difference to quantity of oil produced, saved and sold (refined product sale). Audit highlighted that there was variation in figures of raw production available with Director General (PC) Petroleum Division and figures of sales actually declared by the OGDCL for payment of royalty. Further, the DG (PC) has not record of crude oil and gas actually sold and no mechanism in place to authenticate the figures of production and sale of crude oil and gas. The PAC has directed the ministry to 'ensure the collection of royalty on value of oil and gas actually saved (refined products) as required under the law instead of on value of oil and gas sold'. The audit official pointed out huge difference between crude oil supplied and sold by OGDCL. Moreover, field production of crude oil is reported after considering the basis sediment and water drainage, so the treatment of the same at the refinery is not justifiable. The auditor observed in the audit para that DG PC did not take notice of difference between petroleum products produced and saved and sold by OGDCL. Due to this difference of 373,977 barrels OGDCL evading royalty, the government was deprived of revenue worth Rs467.47 million approximately. According to the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948, read with Rule 36 of Pakistan Petroleum (Exploration and Production) Rules, 1986, holders of a lease shall pay a royalty at the rate of 12.5 percent of the wellhead value of the petroleum produced and save. OGDCL Managing Director Ahmed Hayat Lak asked the audit to read out Rule 37 and Rule 36 of Pakistan Petroleum (Exploration and Production) Rules, 1986, which provide clarification in the matter. The audit official rejected the argument of the OGDCL management which says, 'Quantity of dispatch was taken out of which certain quantities had to be deducted and reconciliation was produced. The reduction in quantity due to drainage of water losses/conversion factor requires more supporting documents for verification of facts'. Acting DG (PC) Kashif Ali explained that main difference is due to the various factors such as production is always reconciled with the receipt of refinery at temperature and transport losses. On other hand, Petroleum Division has yet to implement its concession management system which was installed in 2009. In the office of DG (PC), concession management system remained dormant and was not helpful in systematic provision of data. 'Millions of rupees were spent for development of the software but the purpose was not being served i.e. to compile the record in the systematic manner,' the audit official said. This system was devised to keep information and record updated regarding each E&P Company relating to its activities and other obligations. Secretary Petroleum Momin Agha and DG (PC) explained that they again hired the services of contractor LMKR in January 2025 to manage petroleum concession agreement, petroleum sharing agreement, license and lease deed, information relating to operator, status/payable of royalty, rent production bonus, training funds and other obligation. Audit official stated no progress on implementation has been seen in last four months following signing of the contract. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
‘Violation of Petroleum Rules': PMO seeks detailed report from Petroleum Division
ISLAMABAD: Prime Minister's Office has sought a detailed report from Petroleum Division regarding alleged violation of Petroleum Rules by Frontier Holdings Limited (FHL) and SPUD Energy PTY Limited. According to documents, PM Office in a letter dated May 05, 2025 carrying subject 'Urgent Action Required Violation of Petroleum Rules by Frontier Holdings Limited (FHL) and SPUD Energy PTY Limited' asked the Petroleum Division to furnish a detailed report. And, following the PM Office took notice of the alleged violation of the Pakistan Petroleum Rules, 2001, in the disposition of controlling shares of two petroleum exploration firms—SPUD Energy Pty Ltd and Frontier Holdings Limited (FHL), the Director General Petroleum Concession swung into action and advised the Chief Executive Officer of FHL to submit a report in the matter to proceed further in accordance with applicable rules. Earlier, Transparency International Pakistan (TIP) requested the Prime Minister's Office to initiate an investigation into the alleged violation of the Pakistan Petroleum Rules, 2001, in the disposition of controlling shares of two petroleum exploration firms—SPUD Energy Pty Ltd and Frontier Holdings Limited (FHL). In a formal letter dated May 2, 2025, TIP raised concerns over the alleged transfer of controlling shares in the two companies without prior government approval, a move that if confirmed, would violate Rule 69(d) of the Pakistan Petroleum (Exploration and Production) Rules, 2001. According to Rule 69(d), companies must obtain prior consent from the government before proceeding with any disposition of controlling interests. The rule states: 'Without the prior consent of the Government, there shall be no disposition of the share capital of the holder or its parent company in consequence of which any person who, prior to that disposition, had effective control of the holder or its parent company ceases to have such effective control.' TIP stated that SPUD and FHL are linked to Jura Energy Corporation, which recently saw a controlling interest shift from Phoenix Holdings Ltd to IDL Investments Ltd. It alleged that this transaction occurred secretly, without notifying or securing consent from the Petroleum Division. The watchdog also cited past regulatory violations by SPUD and FHL, including a government-ordered recovery of Rs1.3 billion in unpaid royalties. TIP warned that failure to act on this latest development could set a dangerous precedent, undermine regulatory authority, and compromise Pakistan's energy sovereignty. Reportedly in 2023, Prime Minister Shehbaz Sharif directed the petroleum division to recover an outstanding royalty amount of Rs 1.13 billion from two oil and gas firms, Spud Energy and Frontier Holdings Limited (FHL). The PM's office, in a letter dated January 20, 2023, to the secretary petroleum division, said that 'it has been desired that the petroleum division shall ensure recovery of the outstanding amount within two weeks and submit a compliance report.' In the letter which was addressed to the managing director, Sui Southern Gas Company Limited (SSGC), Fazal Abbas, the petroleum division's financial analyst, advised the company to stop the payments of Spud Energy and FHL. He said the outstanding royalty should be deposited in the government treasury. Copyright Business Recorder, 2025
