ISLAMABAD, Aug 27: Prime Minister’s Adviser on Petroleum Dr Asim Hussain unveiled on Monday the Petroleum Policy 2012 which offers to almost double the production price of natural gas for new discoveries from the current rate of about $3.24 per million British Thermal Unit (MMBTU).

He also predicted improved gas supply during coming winter. “The threat of tough winter I have been talking about is over and the coming winter will pass comfortably,” he claimed. The government, he said, was now moving on the right track as far as the gas management was concerned.

According to him a long-term solution has been put in place to tide over the gas shortage troubling the fertilizers industry. Under the plan the country will be able to start exporting fertilizers in about a year.

He said gas from small fields, marginal fields and low heating value gas would be directly provided to fertilizer companies to reduce their dependence on the two gas companies. The industry in Punjab, he said, was now getting gas five days a week. Exploration and production companies have also been asked to supply gas to Sui gas companies against some tangible guarantee and the companies have been asked to provide gas to consumers in public and private sectors and also to power sector against some guarantee or cash payment so that they get out of the non-payment cycle and eventually the chronic circular debt.

“The higher gas price being offered on new discoveries will be passed on to consumers,” the adviser said, adding that subsidies on gas would have to be ended in a gradual manner.

He said a better price had to be offered in view of rising international prices of crude oil because international exploration and production companies were not forthcoming with investments under the lower price offered in the previous policy.

“Pakistan will no more face any problem of energy shortage,” Dr Hussain claimed. About 500 million cubic feet per day (MMCFD) of gas will be added to the system shortly and the country’s total production will increase to about 5 billion cubic feet per day (BCFD) by the middle of next year from the current 4.2 BCFD with the completion of some ongoing schemes.

He said the oil production would also increase within a year to about 100,000 barrels a day from the current about 67,000 barrels and it would help meet at least 25 per cent of the total oil requirements of 380,000 barrels.

He said negotiations were in an advanced stage with India for import of about 200 MMCFD of liquefied natural gas (LNG) through tankers for areas around Lahore because long-term LNG import projects faced teething problems. About CNG, the adviser said it was unwise to waste the precious resources by burning it in vehicles when it could be used for a better return in other sectors. “Burning of fuel is the worst use and hence we should make the best use of every molecule of energy,” he said. Talking about salient features of the new petroleum exploration and production policy, the adviser said that in order to attract foreign investment a better gas price had been offered which includes production price of $6 per MMBTU for Zone-III (West Balochistan, Pishin and Potowar), $6.3 per MMBTU for Zone-II (Kirthar, East Balochistan, Punjab and Suleman Basin) and $6.6 per MMBTU for Zone-I (Lower Indus Basin).

Likewise, an attractive price of $7 per MMBTU has been offered for offshore shallow, $8 per MMBTU for offshore deep and $9 per MMBTU for offshore ultra-deep zone. The existing policy offered $3.13 MMBTU for Zone-III, $3.37 per MMBTU for Zone-II, $3.6 per MMBTU for Zone-I and $3.836 per MMBTU for deep and ultra-deep offshore exploration. On first three discoveries, the companies would be offered a one dollar per MMBTU higher price to encourage them to speed up development programmes.

The exploration licence period has been reduced from 9 years to 7 years and the appraisal renewal period has been reduced from two years to one year.

The adviser said the windfall levy had been reduced from 50 to 40 per cent and that would offer better return to companies and the levy would be equally shared by federal and provincial governments. To determine the production price, the base price of crude oil and condensate for windfall levy has been increased from $30 per barrel to $40 per barrel which will rise each year by $0.5/barrel while the gas pricing ceiling has been increased to $110 per barrel from $100 per barrel. The exploration and production companies will be allowed to sell their gas at the mouth of gas field and gas utilities will bear the pipeline cost through consumer tariff. The producers will be bound to sell 90 per cent of gas to Sui gas companies and 10 per cent to buyers of their own choice.