Page 153 - Pakistan Oilfields Limited - Annual Report 2021

NOTES TO AND FORMING

PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2021

2021 2020
Rupees ('000)

23. NET SALES

Crude oil 17,939,545 17,264,179
Gas - note 23.1 13,494,261 14,136,451
Less: Shrinkages/own use 1,779,776 1,656,263
11,714,485 12,480,188

POLGAS - Refill of cylinders 6,189,736 6,566,996

Solvent oil 188,811 220,478

Sulphur 9,280 7,700

36,041,857 36,539,541
23.1 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 Petroleum Policy 2007, Petroleum Policy
2009 and Petroleum Policy 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, Maramzi & 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 arears.

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 Petroleum
Concession 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

ANNUAL REPORT 2021 151