17 Years no work, but another licence extension?

ISLAMABAD: Instead of revoking licence or imposing a penalty on the operator, who failed to drill a single well over the last 17 years is now set to be awarded a renewed Exploration License (E.L) at Zamzama North. 

Petroleum division has been lobbying to secure the Prime Minister’s consent for granting another extension to the licence which has failed to yield any results during the last 17 years.

According to sources, Zamzama North Block is a prospective Block where seismic data has been acquired but exploratory well(s) could not be drilled by the operator due to unknown reasons. 

Profit’s sources further said that the Zamzama North Block is operated by Heritage Oil and Gas Limited (HOGL) and the Joint Venture Partners (JVPs) have requested grant of two years extension for the exploration licence effective from the date of extension to discharge its outstanding work commitment. 

This is alongside the fact that the company sought approval for the change of operatorship from Heritage Oil and Gas Limited (HOGL) to Al-Haj Pakistan Exploration Limited (APEL) and also approval for assignments for working interests. 

The source further explained that HOGL have paid assignment fees and provided like particulars of proposed assignees, as required under the legal requirements. 

According to insider information the petroleum division is leaving no stone to give extension to Zamzama North Block licence and sought Prime Minister Shahbaz Sharif’s consent as Minister In-charge for Petroleum Division for the submission of a summary before the federal cabinet’s economic coordination committee (ECC) for obtaining its necessary approval before granting another extension in Zamzama North Exploration License.

It is relevant to note here that the Zamzama North exploration licence expired in December, 2010, after which further extension was not granted due to the fact that the company was unable to fulfil the minimum work commitment within stipulated time frame as required by the industry laws.

Subsequently the company was served a notice, followed by a “Show Cause Notice” to remedy the default. Finally, the company was also given the opportunity of “Personal Hearing” over the said licence and the notice was withdrawn while a conditional consent was granted that HOGL shall be entitled for grant of extension for a period of two years with effect from issuance date of extension letter by the government subject to compliance of certain conditions.

Raising concerns over the withdrawal of the Show Cause Notice, the sources also   claimed that the notice cannot be withdrawn on the Block without approval of the Cabinet – this has been done illegally because all of the cases for revival have been approved by Cabinet. 

Further alleging that Heritage Oil has not fulfilled the provisions given in the conditional extension while extension and assignment cannot be granted in Zamzama North Block unilaterally as the same process of approval of ECC and Cabinet was not carried out for withdrawal of show cause notice. 

The Block needs to fall under revocation and can only be revived after clearance approval from Cabinet. The proposed assignee in this case along with the proposed operator is Al-Haj. Al-Haj has allegedly been part of a dubious transaction wherein it took over Premier Oil’s assets in Pakistan – this approval of transfer of assets and interests was not given by either Secretary, Minister, ECC or Cabinet as the approval was allegedly done at the level of the then Additional Secretary Sher Afghan which is strictly against the law, said sources.

Sources further said that in 2019, 11 Exploration Licences were revoked on account of non-performance and were issued Revocation Licences. However, the then Director General Petroleum Concessions Qazi Muhammad Saleem Siddiqui excluded Zamzama North Block from this list even though the Block was awarded in 2006-07 and no work has been done in the Block while now this Block is currently being assessed by DGPC for extension and regularisation.

“This Block should immediately be revoked and brought in bidding as per the normal procedure. Any alternative action will be against the rules and regulations,” said one source on the condition of anonymity.

A spokesman of the petroleum division said that HOGL is a working interest owner in Zamzama North Block. The company has acquired 330 L. Kms of 2D seismic data in the License area. A Notice was issued to the company in February of 2016 followed by a Show Cause Notice in May of the same year and finally Personal Hearing was conducted wherein the notices were withdrawn and conditional extension was offered to the company. 

The request of the company for assignment and grant of extension in the exploration licence is under examination in accordance with the applicable rules. The licence cannot be revoked as the company has paid the outstanding financial obligations up to the expiry date, furthermore, recently the Government has approved a framework for revival of the revoked blocks in order to expedite the exploratory activities in the country, said Petroleum division’s spokesman.

Available documents however indicate that Zamzama North Exploration License falling in district Naushahro Feroz and Dadu covering an area 1229.23 Square Kilometres, was granted to M/s Hycarbex American Energy INC as operator in December of 2007 in accordance with rules which require a minimum work commitment of 300 Line Kilometres (L-KMS) 2D seismic data acquisition and drilling of three exploratory wells.

Later on, operatorship of the said Block was transferred to HOGL. The current Joint Venture Partners of Zamzama North include HOGL with 48% working interest, Hycarbex American Energy INC with 20% working interest, Sprint Energy Private Limited with 24% working interest and Trakker Energy Private Limited with 8% working interest.

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