Page 38 - Condensed Interim Financial Statements - 1st quarter ended September 30, 2019

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16. Net sales
Crude oil
Gas - note 16.1
POLGAS/CAPGAS - Refill of cylinders
Solvent oil
On August 28, 2015, the Company signed the Supplemental Agreement with the
Government of Pakistan (the Government) for conversion of TAL Block Petroleum
Concession Agreement (PCA) signed under the 1997 Petroleum Policy to Petroleum
(Exploration & Production) Policy 2012 (Petroleum Policy 2012). Price regimes
prevailing in PetroleumPolicy 2007, PetroleumPolicy 2009 and PetroleumPolicy 2012
shall be applicable correlated with the spud date of wells in the respective policies
starting from November 27, 2007 and for future exploratory efforts under the above
mentioned block. The conversion package included Windfall levy on Natural gas only.
Draft statements specifying sums aggregating US $ 34,213 thousand (Rs 3,393,389
thousand) till June 30, 2015 due to the Company in respect of Mamikhel, Maramzai &
Makori East discoveries in TAL block were submitted to the Government on December
8, 2015. On October 9, 2017 Oil and Gas Regulatory Authority (OGRA) issued gas
price notifications of the subject arrears.
On December 27, 2017, the Ministry of Energy (Petroleum Division) notified certain
amendments in Petroleum Policy 2012 which also included addition of following
explanation of conversion package:
“the conversion package shall include (i) price of Natural Gas for New Exploration
Efforts (ii) windfall levy on Natural Gas (iii) EWT gas production, pricing and
obligations (iv) Windfall levy on Oil & Condensate, only for PCAs converting from
1994 and 1997 Petroleum Policies and (v) Financial obligations relating to
production bonus, social welfare and training”.
Under the said Notification, the Supplemental Agreements already executed for
conversion from Petroleum policies of 1994 & 1997 shall be amended within 90 days,
failing which the working interest owners will not remain eligible for gas price incentive.
On January 3, 2018, Directorate General Petroleum Concessions (DGPC) has
required all exploration and production companies to submit supplemental
agreements to incorporate the aforementioned amendments in PetroleumConcession
Agreements (PCAs) signed under 1994 and 1997 policies, for execution within the
stipulated time as specified above.
Based on legal advice, the Company is of the view that already executed Supplemental
Agreement cannot be changed unilaterally, the Supplemental Agreement was signed
under the Conversion Package where gas price was enhanced and Windfall Levy on
Oil/Condensate (WLO) was not applicable, the impugned SRO by giving retrospective
effect amounts to taking away the vested righGovernment has no authority to give any
law or policy a retrospective effect. The Company filed Constitutional Petition
challenging the imposition of WLO on February 19, 2018 against Federation of
Three months period ended
Sep 30, 2019
Sep 30, 2018
Notes to and forming part of the condensed interim
Consolidated Financial Statements (Unaudited)
For the three months period ended September 30, 2019