KARACHI (Feb 1): Sindh Chief Minister Syed Murad Ali Shah has strongly urged the federal government to incorporate Sindh’s input into the framework allowing oil and gas exploration and production companies to sell 35% of their stakes to private entities. He insisted that no such transaction should be permitted without Sindh’s explicit consent.
The Chief Minister directed the Petroleum Division to ensure the following provisions in the framework:
- Gas sold to third parties should be prioritised for Sindh Province. Any sale outside Sindh must require an NOC from the Sindh government.
- Provincial governments must be allowed to directly collect the windfall levy from E&P companies on third-party gas sales.
- Producers must seek approval from both the Federal Ministry of Energy and respective provincial governments before executing third-party gas sales.
- The long-pending demand of Sindh for transparency in production data must be addressed. The Petroleum Division should regularly share well-head production data to ensure Sindh receives its fair share.
- The framework must account for potential risks like price volatility and supply chain disruptions.
Ensuring Transparency and Sindh’s Fair Share
The CM emphasized that the latest oil and gas production statistics should be shared regularly with Sindh. He instructed the Energy Department to engage actively with the Federal Petroleum Ministry to secure the province’s rightful share, including payments under the windfall levy.
Mr. Shah conveyed these directives while chairing a meeting of the Sindh Energy Holding Company Ltd (SEHCL), a subsidiary of the Sindh Energy Department. The meeting was attended by Sindh Energy Minister Nasir Hussain Shah, Principal Secretary Agha Wasif, Energy Secretary Musaddiq Tahirkheli, and SEHCL CEO Tufail Khosa.
Expansion of Sindh’s Energy Footprint
The Chief Minister underscored the importance of ramping up exploration activities, enhancing revenue streams, and securing Sindh’s fair share of hydrocarbon reserves. He reaffirmed the provincial government’s commitment to strengthening the energy sector.
Minister Nasir Shah, Secretary Musaddiq Tahirkheli, and CEO Tufail Khosa presented an in-depth briefing on SEHCL’s operational performance and future roadmap. Nasir Shah highlighted SEHCL’s pivotal role in energy exploration and resource management, noting that the company currently holds stakes in multiple exploration blocks and has invested Rs1.925 billion since 2014.
One of SEHCL’s recent achievements is the commencement of production from three wells, marking its first direct revenue generation. The company expects to earn Rs113 million in 2025-2026, with additional revenue anticipated from a newly discovered gas field in Shah Bandar.
Key Strategic Approvals for Growth
To ensure long-term sustainability and maximize profits, CM Murad Ali Shah approved vital initiatives:
- Increasing Working Interest: SEHCL’s current 2.5% working interest in exploration blocks restricts its revenue potential. The CM directed the Energy Department to increase this stake to 10-15% in high-potential blocks to secure a larger share in future discoveries.
- Acquisition of Hidan Block: The Chief Minister sanctioned the acquisition of the Hidan Block in Dadu, Kambar, and Shahdadkot districts. This block holds an estimated gas reserve of 130-140 BCF and represents a lucrative investment opportunity. SEHCL will retain a 51% working interest, with the remaining 49% farmed out to key industry players like PPL, OGDCL, or MPCL. The first gas production is projected by Q1-2028, with an expected annual net cash flow of $1.64 million (Rs. 460 million) over 23 years. SEHCL’s share of the investment amounts to $10.35 million (Rs. 2.89 billion).
Exploring Untapped Reserves & Offshore Potential
The CM highlighted Sindh’s vast untapped tight gas reserves, estimated at 20-30 TCF. He also stressed the need to explore offshore drilling opportunities, which could be a game-changer for Pakistan’s energy security.
Securing Sindh’s Rights in Windfall Levy Case
Murad Ali Shah addressed the ongoing Windfall Levy (WLO) litigation, where companies operating in Sindh—United Energy Pakistan Limited and OMV Alpha—are challenging the government’s WLO imposition. He directed the Energy Department to pursue legal representation in the Islamabad High Court to safeguard Sindh’s rightful share of hydrocarbon revenues.
He also called for policy amendments to enhance provincial autonomy over oil and gas resources in line with Article 172(3) of the Constitution. Additionally, he demanded a reduction in the federal government’s representatives in state-owned energy firms (OGDCL, PPL, SSGCL, PSO, GHPL, and MPCL) and their replacement with Sindh’s representatives.
Sindh’s Commitment to Energy Security
Chief Minister Murad Ali Shah reaffirmed his commitment to expanding Sindh’s energy sector, instructing the Energy Department to fast-track approvals and accelerate exploration activities.
“Sindh is rich in natural resources, and we must ensure that these resources are effectively utilized for the benefit of our people,” he stated. “By increasing our working interest, securing new exploration blocks, and advocating for our rightful share in energy revenues, we are paving the way for a stronger, self-reliant Sindh.”
The strategic decisions made in this meeting mark a turning point for SEHCL and Sindh’s energy industry. With a robust financial outlook, expansion into high-potential blocks, and proactive policy initiatives, Sindh is positioned to emerge as a dominant player in Pakistan’s energy landscape.
These forward-thinking initiatives will not only boost Sindh’s provincial revenues but also contribute significantly to Pakistan’s overall energy security, ensuring a stable and prosperous future for the province.
