THATTA, Dec 23: The government and multinational companies engaged in oil and gas exploration in Sindh have failed in proper utilisation of production bonus, community welfare investment, employment and training to local communities as envisaged in the Petroleum Concession Agreement (PCA) signed by the ministry and companies.

This was stated at a media workshop on ‘oil and gas exploration and production policy, laws and rules’ organised by the Participatory Development Initiatives (PDI) with the collaboration of Oxfam-GB for journalists at the press club on Tuesday.

Participants discussed violation of policy, laws and rules governing the exploration and production of oil and gas. Participants criticised the centralised policy of awarding oil and gas exploration and production licenses by the ministry of petroleum and natural resources and demanded that the Sindh government, federal, provincial and district representatives should be included in the process of awarding licenses as well as in the monitoring of legal obligations towards local communities and environment.

They claimed that according to the PCA, 12 per cent of production had to be paid as royalty to oil or gas producing district which was not being followed in majority of districts.

They further said that Sindh produced 56.6 per cent and 70.1 per cent of total oil and gas, respectively in the country but companies were violating international, national laws, and rules and regulations, including the Corporate Social Responsibilities (CSR), Petroleum Concession Agreement, Petroleum Exploration and Production Policy 2007, Pakistan Environmental Protection Act 1997 and other laws.

According to the PCA, companies should pay production bonus ranging from $500,000 with the start of commercial production from each field and $5 million in case production reached 100 MMBOE.

The amount should be spent on the development of areas producing oil and gas and communities living there but local communities in Sindh had not received a penny, they said.

They also quoted the Petroleum Exploration and Production Policy as well as Petroleum Concession Agreement which say that the companies should spend from $10,000 to 25,000 per year on training local communities for providing jobs in companies and according to law, local people should be trained and employed by the companies but all laws were being violated.

There was no proper monitoring system whether or not companies were fulfilling their legal obligations, they said. They said that there was a need of developing monitoring mechanism which could ensure participation of local communities and their representatives.