February 01, 2024 (MLN): Finally, the long-awaited Tight Gas (Exploration & Production) Policy 2024 has been made public by the government. The policy aims to incentivize the oil and gas industry to invest in the exploration of unconventional/tight gas resources that have not been produced due to non-commercial viability.

It will help provide a policy regime for transparent, effective, and efficient processing of regulatory approvals and open new frontiers for the exploration of Tight Gas which would help increase the exploration activities in the country.

Moreover, it will enhance indigenous production of hydrocarbons minimize reliance on imported fuels and regenerate additional revenues for the government.

Reducing recourse to sovereign debts by saving foreign currency will also be possible under this policy.

More importantly, it will help keep the local gas prices at an affordable level to consumers by producing cheaper local gas vis-à-vis imports.

In addition to creating employment opportunities in the country, it will also promote the transfer of technology and collaboration between local and foreign equipment manufacturers.

Why do we need this policy?

Pakistan's energy requirement has surged over the years and the demand is primarily being met through conventional hydrocarbons and import of alternative fuels.

Technological advancements in the oil and gas sector have, however, opened new opportunities and exploitation of unconventional sources has not only become possible but also commercially viable.

Pakistan has a huge potential in this sector and the upstream oil and gas industry which hitherto remained grossly unexplored. Tight gas is among the major unconventional resources nevertheless policy interventions in the past could not attract desired investment and consequently the industry has yet to benefit from the Country's Tight Gas Reservoirs.

Tight Gas (Exploration & Production) Policy, 2011 was the first initiative to encourage the upstream petroleum industry to invest in the exploration and production of tight gas.

Lukewarm response from the industry has necessitated a review of the policy regime especially since unconventional E&P ventures are capital-intensive, technically challenging and require state-of-the-art technology during all stages of exploration and production.

The government has, therefore, formulated the Tight Gas (Exploration & Production) Policy, 2024 intending to give impetus to tight gas exploration in a technically and commercially viable manner.

The Policy has been designed to incentivize local and foreign E&P companies to invest in unconventional hydrocarbons.

The government of Pakistan is cognizant of the fact that exploitation of unconventional sources involves drilling of multiple wells to obtain optimum production as opposed to conventional wells where a single well can produce up to 50 MMSCFD gas; this involves a different economic model which is only viable once adequate returns are assured.

From when is this policy applicable?

The Tight Gas (Exploration & Production) Policy shall come into effect from the date of its publication in the official Gazette. The incentives of this Policy shall apply to the gas discoveries that qualify and are accepted as “Tight Gas” under the existing and future Exploration Licences (EL), Petroleum Concessions Agreements (PCA) and Development & Production Leases (D&P)/fields and Mining Leases (ML).

 The incentives will also apply to existing tight gas discoveries that have not been developed as at the effective date of this Policy.

For this Policy, Tight Gas discoveries will be considered as ‘not developed’ where: field development plan (FDP) was not submitted; FDP was submitted but not approved; FDP was approved but development programme was not substantially carried out or it failed to meet its objectives.

All those Tight Gas discoveries which have received Tight Gas price under Policy 2011 and in production will not be eligible for a price under this Policy.

However, all other provisions, including the procedure for certification as spelled out in this policy will apply mutatis mutandis to such Tight Gas discoveries.

What is Tight Gas?

Tight Gas is defined as a natural gas that cannot flow naturally at commercial rates with conventional methods despite having hydrocarbon reserves, requires advanced technologies for its exploitation/production and having an estimated value of effective permeability calculated using a geometric mean of less than “1.0 milli Darcy (mD).”

Copyright Mettis Link News

Posted on: 2024-02-01T11:54:23+05:00