Pakistan’s oil and gas industry is not governed by a single statute, regulator or commercial model. A modern petroleum project may begin with a federal petroleum right, involve provincial constitutional ownership interests, require land and environmental approvals, depend on OGRA-regulated transportation or marketing infrastructure, use international financing and foreign-exchange arrangements, and ultimately be governed by contracts whose dispute clauses lead to arbitration or constitutional litigation.

That complexity is precisely why oil and gas work cannot safely be approached as a generic corporate or commercial exercise.

Josh and Mak International advises Pakistani and foreign clients across the petroleum value chain, including exploration and production companies, working-interest owners, investors, LNG and LPG businesses, oil marketing companies, contractors, lenders, infrastructure developers, landowners and other stakeholders. Our work can involve petroleum-right analysis, regulatory licensing, due diligence, market entry, joint ventures, farm-ins and farm-outs, acquisitions, drilling and oilfield services, gas sales, LNG transactions, pipelines, terminals, refineries, storage, land access, environmental compliance, foreign investment, taxation, disputes and arbitration.

The objective is not simply to identify the legislation. It is to understand what the legislation means for the transaction the client is actually trying to complete.

Pakistan’s energy legal framework has changed significantly since many older industry guides were written. The contemporary position includes the post-Eighteenth Amendment constitutional ownership structure, the Pakistan Onshore Petroleum (Exploration and Production) Rules 2013 as amended, the Pakistan Offshore Petroleum (Exploration and Production) Rules 2023, the Petroleum Exploration and Production Policy 2012 as amended, the Tight Gas (Exploration and Production) Policy 2024, the Model Petroleum Concession Agreement 2013 as amended in January 2024, the modern gas third-party access regime and Pakistan Gas Network Code, established LNG and RLNG regulation, the Pakistan Oil (Refining, Blending, Transportation, Storage & Marketing) Rules 2016, the 2023 refinery policies, the Petroleum (Amendment) Act 2025 and continuing 2026 reforms in pricing, foreign exchange and offshore exploration.

Older statements that Pakistan had no operating LNG framework, that private gas trading was not applicable, that downstream oil regulation still depended principally on the 1971 rules, or that pre-Eighteenth Amendment federal ownership remained the complete constitutional position are no longer suitable for a 2026 legal guide.

Why Oil and Gas Law in Pakistan Requires Specialist Counsel

A petroleum licence is not an ordinary corporate asset. A gas-sale agreement is not simply a sale-of-goods contract. An LNG project is not merely a terminal construction exercise. An OMC licence is not equivalent to company incorporation. A refinery policy incentive is not the same thing as a bankable entitlement. A private land lease does not itself confer a petroleum right, and a petroleum right does not automatically resolve every surface-access problem.

Across the sector, commercial value depends upon the interaction of title, regulation, infrastructure, contracts, financing and public law.

That interaction is particularly visible in transactions. A buyer of a working interest may be acquiring a percentage of production, but it may also be assuming minimum work obligations, guarantees, abandonment exposure, social-welfare commitments, environmental risk, joint-venture liabilities and regulatory constraints on future transfer. A purchaser of an OMC may acquire a perfectly valid company but discover that licences, depots or retail sites do not correspond with the business represented in the transaction documents. A gas producer may negotiate an attractive price with a private buyer yet still lack the capacity or approvals required to transport gas to that buyer.

The role of specialist counsel is to identify those dependencies before they become disputes.

The Oil and Gas Value Chain: Where We Advise

Josh and Mak International can advise across upstream, midstream and downstream petroleum activities, including:

• petroleum reconnaissance, exploration and production;
• petroleum concession agreements, exploration licences and development and production leases;
• offshore production sharing arrangements;
• working interests, joint ventures and operatorship;
• joint operating agreements and sole-risk operations;
• farm-ins, farm-outs, assignments and changes of control;
• drilling, seismic, well services and field-service contracts;
• gathering and processing facilities;
• gas sale and purchase agreements;
• crude oil and petroleum-product sale arrangements;
• gas transportation, network access and pipeline agreements;
• LNG importation, terminal development, tolling, regasification and RLNG;
• LPG production, marketing, storage, filling and distribution;
• CNG licensing and regulated operations;
• oil marketing company licensing and acquisitions;
• refineries and refinery-upgradation projects;
• petroleum depots, terminals and storage;
• oil and gas pipelines and rights of way;
• petrochemical and processing facilities;
• environmental, HSE and abandonment issues;
• royalty, production-bonus and governmental-payment questions;
• foreign investment, project finance, foreign exchange and repatriation;
• competition and merger-control issues;
• public procurement;
• OGRA and DGPC proceedings;
• constitutional litigation, arbitration and foreign-award enforcement.

The Constitutional and Regulatory Architecture

Article 172 and Ownership of Petroleum

Pakistan’s constitutional treatment of petroleum must be understood in its post-Eighteenth Amendment form.

Article 172 distinguishes between resources within a Province or adjacent territorial waters and resources in the continental shelf or underlying the ocean beyond territorial waters. Subject to existing commitments and obligations, mineral oil and natural gas within a Province or territorial waters adjacent to it vest jointly and equally in that Province and the Federal Government. Resources within the continental shelf or underlying the ocean beyond territorial waters remain constitutionally vested in the Federal Government.

The commercial consequence is that petroleum regulation cannot sensibly be described as a purely federal exercise in which Provinces are merely administrative observers. Federal petroleum rights operate within a constitutional resource-federalism framework in which provincial ownership, royalty, participation, producing-area welfare and Article 158 gas-priority considerations can be materially relevant.

Article 158 and the Province of the Wellhead

Article 158 concerns precedence in meeting the requirements of the Province in which a natural-gas wellhead is situated, subject to the constitutional text. The contemporary Petroleum Policy expressly recognises this principle in the commercialisation of gas.

For producers and private gas buyers, Article 158 is therefore not merely a constitutional curiosity. It can form part of the regulatory context within which gas allocation, private sale and domestic supply are considered.

DGPC and OGRA Perform Different Functions

Two institutions dominate much of the petroleum regulatory discussion, but they should not be treated as interchangeable.

The Directorate General Petroleum Concessions, within the Petroleum Division, administers the upstream petroleum-rights regime. Its functions include the grant and administration of reconnaissance permits, exploration licences and development and production leases; negotiation and administration of petroleum concession and production-sharing arrangements; oversight of exploration, development and production commitments; and the collection or administration of governmental receipts arising from petroleum rights.

OGRA, by contrast, is the principal regulator for specified midstream and downstream oil and gas activities. Its exclusive licensing jurisdiction covers regulated activities in natural gas, CNG, LPG, LNG and oil, including pipelines, transmission and distribution networks, gas sale and storage, LNG and LPG installations and marketing, refineries, oil pipelines, petroleum storage and marketing.

A project may move from one regulatory environment to the other. An E&P company’s right to produce gas may arise under the upstream petroleum framework, while the private buyer, transporter or marketer may require OGRA licences and access arrangements before the gas can lawfully reach the market.

The Current Petroleum Policy and Model Documents

The Petroleum Division continues to publish the Petroleum Exploration and Production Policy 2012 in amended form. It also publishes the Tight Gas (Exploration and Production) Policy 2024 and the Model Petroleum Concession Agreement 2013 as amended in January 2024.

Existing concessions, however, may originate under earlier petroleum policies and rules. A 2026 legal review therefore cannot assume that the latest policy automatically governs every historic field.

The correct legal exercise is documentary. Counsel should identify the original petroleum right, the rules and policy under which it was granted, the PCA or PSA executed for the concession, subsequent conversions or supplemental agreements, amendments, assignments, extensions, relinquishments, development approvals and any special fiscal or pricing arrangements.

A petroleum right has a legal history. Its present value can depend upon that history.

Upstream Petroleum Law in Pakistan

How Petroleum Rights Are Acquired

A company seeking upstream acreage may obtain rights through the statutory and policy procedures administered by DGPC, including competitive bidding and other authorised award processes.

A successful applicant does not merely acquire acreage. It assumes a package of commitments. These may include minimum work, financial guarantees, exploration timing, data obligations, local participation, social-welfare expenditure, training and other obligations under the governing policy, rules, licence and concession agreement.

The bid therefore needs legal review before submission, not merely after award.

Who May Hold Petroleum Rights?

Both Pakistani and foreign companies may participate in upstream petroleum projects, subject to applicable technical, financial and regulatory qualification requirements.

The Petroleum Policy requires qualifying information concerning corporate constitution, ownership, financial capacity, technical capability and relevant experience. A successful foreign participant is required to establish the prescribed legal presence in Pakistan within the applicable post-award period, including by incorporation or registered branch structure where permitted.

The choice between a Pakistani subsidiary and a foreign branch is not merely administrative. It can affect liability, taxation, foreign exchange, financing, employment, repatriation, corporate governance and eventual exit.

Reconnaissance Permits

A reconnaissance permit is a limited, non-exclusive petroleum right. It permits the holder to undertake authorised reconnaissance work, which may include geological, geophysical, geochemical and related activities.

It should not be valued as though it were an exclusive exploration licence.

The permit does not prevent the State from granting another petroleum right over the same acreage, and it does not automatically convert into an exploration licence. The contemporary onshore framework contemplates an initial one-year term and a possible further one-year renewal, subject to the applicable conditions.

The commercial distinction is between access to geological information and exclusivity over future development.

Petroleum Exploration Licences

An exploration licence creates an exclusive right to undertake exploration within the licence area, including drilling for petroleum, subject to the governing rules, licence and PCA.

It is not an unrestricted production right.

Test production, early commercial production and other pre-lease production remain subject to the applicable petroleum framework. A discovery must normally proceed through appraisal, evaluation, commerciality and development processes before full development and production rights are secured.

The Exploration Term

Under the contemporary onshore framework, the initial exploration term may extend to five years, divided into Phase I of three years and Phase II of two years.

Continuation from one phase to another is linked to performance and further commitments. Renewal periods may be available subject to satisfaction of prior obligations and the assumption of additional work.

For due diligence, the expiry date on the face of the licence is only the beginning of the analysis.

A buyer should identify the phase reached, time remaining, work already performed, undischarged commitments, guarantees, planned wells, relinquishment deadlines and any pending extension application.

Work Units and Minimum Work Commitments

Minimum work commitments sit at the heart of the exploration bargain.

The Model PCA uses work units and expenditure obligations to quantify exploration commitments. Seismic acquisition, wells and other qualifying work may contribute towards discharge of the programme, but the precise rules governing credit and carry-forward must be read from the relevant concession documents.

Farm-out transactions therefore require careful drafting around work obligations.

If an incoming party agrees to “carry” an existing participant through a well, the agreement should specify which regulatory commitment the well is intended to satisfy, who bears cost overruns, what happens if drilling fails to reach the required objective, whether a substitute well is required and who bears any liability if DGPC does not accept the operation as satisfying the commitment.

A one-line drilling carry can conceal millions of dollars of contingent risk.

Performance Guarantees

Petroleum exploration obligations are ordinarily supported by security.

The onshore framework permits forms of security including bank guarantees, qualifying parent-company or corporate guarantees and other approved arrangements. The precise form and amount depend upon the applicable petroleum documents.

For acquisitions and farm-outs, the legal team should determine whose balance sheet presently supports the concession, whether guarantees need replacement, whether an outgoing participant can obtain release, and what recourse exists if Government calls security after another joint-venture participant defaults.

Security release should be a completion item, not post-completion housekeeping.

Relinquishment

Exploration licences are subject to progressive relinquishment.

The current onshore framework applies a staged acreage-relinquishment structure, including 30 per cent of the original licence area at the end of Phase I, 20 per cent of the remaining area at the end of Phase II and a further 10 per cent of the then-remaining area before the second renewal, subject to the applicable rules and any approved alternative arrangement.

The commercial decision is not merely how much acreage to relinquish. It is which acreage.

Geological prospects, migration pathways, access routes, infrastructure and future development possibilities all make relinquishment an asset-management event rather than a clerical filing.

Discovery, Appraisal and Commerciality

Finding hydrocarbons is not the same thing as establishing commerciality.

A discovery must normally be appraised and evaluated to establish reservoir characteristics, recoverability and commercial feasibility.

Commerciality depends on more than geology. Gas discoveries in particular may depend upon pipeline availability, processing, market access and price.

Extended well testing and early commercial production mechanisms can allow limited production in appropriate circumstances before the full development and production lease process has been completed, but those arrangements carry their own fiscal, operational and accounting consequences.

Significant Gas Discoveries and Retention

The onshore framework recognises that a technically significant gas discovery may not immediately be commercial where a market or transportation route is unavailable.

In specified circumstances, retention periods can allow the holder additional time to develop the infrastructure or market necessary for commercialisation.

Retention should not be treated as indefinite warehousing. A buyer acquiring a retained discovery should review the approval, conditions, expiry date, infrastructure assumptions and evidence of progress towards commercialisation.

Development and Production Leases

Once the applicable commerciality and development requirements are satisfied, the licence holder may apply for a development and production lease in relation to the discovery area.

The transition from exploration licence to production lease is legally and economically significant.

At this stage the project becomes a long-term producing and infrastructure asset. Reservoir management, approved development planning, facilities, processing, measurement, transportation, production, environmental compliance, HSE and eventual abandonment become increasingly important.

The current onshore framework permits a development and production lease for the period justified by the technical material, subject to a maximum of 25 years, with extension possibilities under the Rules.

Mature leases approaching expiry require special analysis. Later amendments to Rule 35 create mechanisms for continued commercial production and re-grant in relevant circumstances, but extension should never be assumed simply because hydrocarbons remain in the reservoir.

Remaining reserves and remaining legal tenure are not the same thing.

Working Interests

A working interest is an undivided interest in the petroleum right together with the rights, obligations and liabilities associated with that interest.

That is fundamentally different from purchasing an ordinary percentage of shares in a company.

A participant holding a 20 per cent working interest ordinarily bears its share of joint operations and expenditure under the joint-venture documents. However, the petroleum framework may impose joint and several liability towards Government in relation to obligations arising under the petroleum right.

This creates an important distinction between external regulatory liability and internal contribution rights among the participants.

Government and Pakistani Participation

The amended Petroleum Policy contains Pakistani participation requirements for joint ventures involving foreign E&P companies.

The current policy provides minimum Pakistani working interests of 15 per cent in Zone I, 20 per cent in Zone II and 25 per cent in Zone III on the applicable participation basis.

The policy also contains specific participation rights for Government Holdings (Private) Limited and the relevant Provincial Government Holding Company. These rights must be built into the joint-venture economics rather than treated as an afterthought.

A foreign investor negotiating percentages with commercial partners should confirm whether the negotiated interests account fully for mandatory or optional governmental participation.

Operatorship

Where several companies hold a petroleum right, the participants appoint an operator subject to the applicable approval requirements.

Operatorship is not an honorary title. The operator manages the day-to-day conduct of joint operations, implements approved programmes and budgets, manages contractors, keeps records, submits regulatory material and carries out numerous functions on behalf of the joint venture.

Non-operators therefore require meaningful governance rights.

The JOA should regulate voting, annual work programmes and budgets, authorisations for expenditure, cash calls, procurement, related-party contracting, information, audit, emergency spending, default, sole-risk operations and removal or resignation of the operator.

A minority non-operating interest can be commercially attractive where the governance architecture is sound. It can be deeply unattractive where the operator effectively controls the asset without meaningful accountability.

Joint Operating Agreements

The JOA is the constitutional document of the upstream joint venture.

It determines how the working-interest owners make decisions, fund operations, deal with defaults, own joint property, undertake drilling and allocate risk.

Existing JOAs should be reviewed during acquisitions. A historic JOA may no longer fit a concession which has moved from early exploration to mature production.

Farm-ins also frequently require JOA amendments because voting interests, operating-committee representation, cash-call percentages and default exposure change when the working-interest structure changes.

Sole-Risk Operations

Petroleum joint ventures need a mechanism for dealing with an operation supported by some participants but not others.

Sole-risk provisions permit participating parties to undertake defined operations at their own cost and risk, subject to the contractual re-entry and risk-premium structure.

These clauses are economically important because they prevent a non-participating party from declining geological risk and then immediately enjoying success on the same economics as those who funded the operation.

The drafting must, however, avoid turning sole risk into a device by which majority participants can coerce minority owners into uneconomic expenditure.

Farm-Ins, Farm-Outs and Assignments

A farm-out is a commercial mechanism by which an existing working-interest owner transfers part of its interest to another party, often in return for cash, reimbursement of historic costs, future exploration expenditure, a drilling carry or a combination of those elements.

The private contract does not, by itself, complete the regulatory transfer.

A petroleum right or working interest cannot be assigned without the prior governmental consent required by the applicable Rules, policy and concession documents. Affiliate transfers may also be regulated.

The transaction should therefore distinguish clearly between signing, satisfaction of conditions precedent, DGPC approval, execution of assignment documentation and legal completion.

Liability After Assignment

A seller should never assume that transferring a petroleum interest automatically extinguishes its exposure.

The governing PCA may preserve liability in the case of partial assignment and can require the assignee to assume specified obligations while leaving the assignor exposed in circumstances prescribed by the petroleum documents.

Private indemnities can allocate risk between buyer and seller, but they do not necessarily restrict Government to the same allocation.

The seller therefore requires carefully drafted indemnities, security where appropriate, regulatory-claim cooperation provisions and a clear treatment of surviving obligations.

Change of Control

A share acquisition of the company holding a petroleum right is not necessarily a regulatory shortcut.

Even where the licence holder remains the same legal person, a direct or indirect change of control may engage the governing licence, PCA, rules or approval conditions.

A petroleum share acquisition should therefore contain a specific regulatory change-of-control analysis.

Surrender, Default and Termination

A petroleum right can be surrendered only within the governing statutory and contractual framework.

Surrender does not automatically erase accrued obligations.

Outstanding work, financial obligations, restoration, data, governmental payments and other surviving liabilities must be considered before exit.

Likewise, failure to perform minimum work or pay amounts due can affect the petroleum right itself. This is why a JOA default must be managed not merely as a debt dispute among private parties but as a risk to the concession.

Royalty, Production Bonuses and Social Welfare

The amended Petroleum Policy identifies royalty at 12.5 per cent of the value of petroleum at the field gate, subject to the governing legal and concession framework.

Production bonuses and social-welfare obligations also form part of the petroleum bargain.

The policy links production bonuses to cumulative production milestones and contemplates expenditure for social-welfare projects in and around the relevant contract area.

These obligations are not mere public relations. Pakistani superior-court jurisprudence has emphasised the importance of enforcing E&P welfare commitments for producing communities.

Local Employment and Training

The petroleum framework gives importance to Pakistani employment, local workforce participation, training and technology transfer.

Operators and contractors should treat these obligations as part of regulatory and contractual compliance rather than a general corporate aspiration.

For international contractors, the labour analysis may also include work visas, immigration status, tax, payroll, provincial employment legislation and HSE requirements.

The 35 Per Cent Third-Party Gas-Sale Reform

The 2024 amendments to Petroleum Policy 2012 materially changed the commercialisation environment for pipeline-specification gas.

Subject to the applicable policy conditions, E&P companies may sell up to 35 per cent of their share of pipeline-specification gas to qualifying third parties holding the required OGRA licence through the prescribed competitive mechanism. The governmental or nominated-buyer structure applies to the balance in accordance with the policy.

This reform links upstream entitlement directly with downstream regulation.

The producer must identify a lawful buyer, the buyer must have the required regulatory status, transportation must be arranged, network capacity must exist, gas must meet quality specifications and tariffs and access arrangements must be understood.

The reform creates commercial flexibility, not an unregulated gas market.

Export of Petroleum

Petroleum export rights remain subject to Pakistan’s domestic requirements, export permissions, applicable petroleum documents and the relevant policy framework.

A right to a working-interest share of production should therefore not be equated with an unrestricted right to export that share.

National energy security remains a relevant part of the legal environment.

Foreign Exchange and Project Finance

Foreign E&P companies require a workable route for capital contributions, project financing, operating expenditure and lawful repatriation.

The Petroleum Policy and PCA must be read with the Foreign Exchange Regulation Act 1947 and current State Bank of Pakistan rules.

Historic petroleum commentary often refers to old exchange-control mechanics or LIBOR-based provisions. Those statements should not be reused without verifying the current banking and regulatory framework.

Project lenders should also examine whether creation or enforcement of security over petroleum rights, receivables, shares or project assets requires governmental consent.

A lender cannot acquire greater rights than the borrower lawfully possesses.

Drilling Approval and Operational Control

Holding an exploration licence does not permit unrestricted drilling.

The onshore rules contain specific notice and approval procedures for drilling, re-entry, testing and abandonment. Wells must be drilled, maintained and abandoned consistently with the petroleum framework and good international oilfield practice.

Operational planning therefore needs to integrate regulatory lead times, land access, environmental approval, rig mobilisation and work-programme deadlines.

Unitisation

Reservoirs do not respect concession boundaries.

Where a petroleum deposit extends across more than one licence or lease area, the Rules contemplate cooperative development and unitisation arrangements.

Unitisation can require complex agreement concerning participating areas, tract participation, operatorship, cost allocation, production allocation, redetermination and shared infrastructure.

Legal drafting and reservoir engineering must therefore proceed together.

Abandonment and Decommissioning

Abandonment is one of the most underestimated liabilities in upstream acquisitions.

A mature field may carry obligations for well plugging, facility removal, contaminated-land management and site restoration.

These liabilities should be valued at acquisition rather than treated as distant end-of-field expenditure.

A seller and buyer may allocate responsibility contractually, but statutory and governmental rights must be analysed separately.

Offshore Petroleum Exploration and Production

The Offshore Legal Framework

Offshore petroleum requires a separate legal analysis from onshore concessions.

The Pakistan Offshore Petroleum (Exploration and Production) Rules 2023 and the contemporary production-sharing framework govern the modern offshore regime. Offshore projects should also be considered against the Constitution and the Territorial Waters and Maritime Zones Act 1976.

The constitutional ownership position differs according to location. Petroleum within territorial waters adjacent to a Province falls within the post-Eighteenth Amendment Article 172(3) structure, while resources within the continental shelf or underlying the ocean beyond territorial waters fall within Article 172(2).

Offshore projects can also require marine, port, navigation, fisheries, environmental, security and coastal approvals in addition to the petroleum right itself.

Renewed Offshore Activity

Pakistan reopened its offshore acreage programme through the Offshore Bid Round 2025 after a long hiatus. The Government offered forty offshore blocks and announced successful bids for twenty-three blocks in October 2025.

The programme was accompanied by the modern Offshore Petroleum Rules and a Model Production Sharing Agreement.

The process did not end with the announcement of successful bids. In May 2026, the Petroleum Division announced the signing of production sharing agreements and exploration licences for offshore blocks, marking a practical transition from the bidding round into awarded offshore rights.

For investors, this means that Pakistan’s offshore framework is no longer merely a dormant statutory regime. It has become an active transaction and project-development area again.

Offshore Contracts and Risk

Offshore projects introduce legal risks which are less prominent in onshore work.

These include marine logistics, offshore drilling units, vessel charters, helicopter services, subsea infrastructure, offshore HSE, pollution, well control, marine insurance, weather downtime, fisheries interference, port and customs issues, maritime boundaries and decommissioning.

The production-sharing structure also requires careful attention to cost recovery, production allocation, Government participation, accounting and audit.

Unconventional and Difficult Gas Resources

Pakistan’s contemporary policy framework includes specific treatment for tight gas and other difficult resources.

The Tight Gas (Exploration and Production) Policy 2024 reflects the Government’s continuing effort to improve the economics of technically challenging domestic gas development.

Projects involving tight gas, low-BTU gas, marginal fields or flare-gas commercialisation should therefore be analysed against the specific policy or guideline applicable to the resource, rather than assuming that ordinary Petroleum Policy economics apply without modification.

Natural Gas, Pipelines and Third-Party Access

The Modern Gas Market

Pakistan’s natural-gas market should no longer be described as a system in which private gas trading is simply “not applicable”.

SNGPL and SSGC remain central to the transmission and distribution system, but the legal framework now includes formal third-party access, shipper arrangements, transportation tariffs, private gas-sale licences and the Pakistan Gas Network Code.

OGRA’s public proceedings in 2025 and 2026 have included applications concerning the sale and transportation of natural gas and transportation tariffs for shippers.

That is a significant development from the historic vertically integrated model.

Gas Third-Party Access

The OGRA Gas (Third Party Access) Rules 2018 provide the regulatory foundation for third-party access to relevant gas infrastructure.

In principle, the commercial objective is to separate ownership or purchase of the gas commodity from ownership of the infrastructure through which the gas is transported.

Access remains subject to the governing regulatory framework, technical feasibility, available capacity and applicable tariffs.

A gas buyer should therefore never assume that a signed Gas Sale and Purchase Agreement guarantees physical delivery.

Pakistan Gas Network Code

The Pakistan Gas Network Code provides an operational and contractual framework for gas moving through the regulated network.

Relevant matters may include nominations, scheduling, measurement, quality, pressure, capacity, balancing, curtailment, operational tolerances and delivery or redelivery requirements.

A private GSPA must therefore be read together with the transportation and network arrangements.

The commodity contract and the pipeline-access contract allocate different risks.

Transportation Tariffs

The price of gas and the cost of transporting gas are legally and commercially distinct.

OGRA has considered transportation-tariff petitions for shipper use of regulated pipelines.

Commercial models should therefore distinguish the producer’s commodity price, processing or compression costs, transportation charges, losses, taxes and levies, and the delivered price at the buyer’s facility.

Private Gas Sale Agreements

A private GSPA should address at least the delivery point, contract quantity, daily and annual nominations, quality, pressure, measurement, title and risk, payment, credit support, take-or-pay or deliver-or-pay where appropriate, curtailment, maintenance, transportation dependency, force majeure, change in law, taxes, defaults and termination.

Where third-party infrastructure is required, the contract must deal expressly with the possibility that both buyer and seller remain willing to perform but pipeline capacity or transporter availability prevents delivery.

LNG and RLNG Law in Pakistan

LNG Is an Established Regulated Sector

Any statement that Pakistan has no LNG facilities or is merely considering LNG importation belongs to an earlier era.

OGRA operates a dedicated LNG licensing framework under the OGRA (LNG) Rules 2007 and maintains current licensing materials for LNG project developers and terminal owners or operators.

LNG projects can involve importation, marine logistics, receiving, storage, regasification, pipeline interconnection, gas transportation and downstream sale.

Each interface carries its own allocation of title, risk and regulatory responsibility.

LNG Terminal Licensing

A terminal project can engage OGRA licensing, port and marine permissions, land or concession rights, environmental approvals, technical standards, construction, FSRU or other storage arrangements, shipping, pipeline connection, terminal-use agreements and downstream gas-sale structures.

The OGRA licence is central but not exhaustive.

A bankable LNG project requires the entire chain to work.

Terminal Access and Tolling

LNG terminal economics can depend upon the applicable third-party access regime.

The regulatory treatment of new terminals has evolved, including policy changes concerning mandatory third-party access.

Terminal-use and tolling agreements should address capacity, berth availability, unloading, storage, heel, boil-off gas, scheduling, compatibility, regasification, send-out pressure, losses, maintenance, demurrage, failure to receive cargo and failure to provide capacity.

LNG Sale and Purchase Agreements

International LNG SPAs may be structured on FOB, DES or other delivery terms.

They can contain oil-indexed, hub-indexed or hybrid pricing, take-or-pay, destination flexibility, scheduling, diversion, quality, force majeure, sanctions and price-review provisions.

For a Pakistani buyer, the international SPA should not become unconditional until its interface with terminal capacity, domestic transportation, foreign exchange and downstream sale has been analysed.

RLNG

After regasification, the commodity enters the domestic gas chain as RLNG.

OGRA continues to determine and publish RLNG prices.

Contracts involving RLNG should therefore identify whether pricing is regulated, pass-through, indexed, fixed, subject to true-up or composed of several determined cost elements.

LPG Regulation

LPG operates under a separate regulatory and technical regime.

OGRA licences and supervises activities including LPG production, storage and filling facilities, marketing, air-mix plants, auto-refuelling and associated regulated operations.

The legal permissions required depend upon where the business sits in the supply chain.

Production is not the same as marketing. Storage is not the same as filling. Bulk transportation is not the same as retail distribution.

LPG contracts should also address cylinder ownership, safety, authorised distributors, storage, transportation, inspection, branding, decanting and responsibility for unauthorised practices.

Because LPG is hazardous, a regulatory breach can quickly become a civil, criminal and insurance problem.

CNG Regulation

CNG remains regulated by OGRA.

Current licensing records distinguish operational and cancelled CNG stations and include requirements for RLNG-based CNG operations.

A buyer of an existing CNG station should therefore verify the current licence and renewal status rather than relying upon possession of the premises and equipment.

Downstream Oil Regulation

The Pakistan Oil Rules 2016

The downstream oil sector is regulated under the Pakistan Oil (Refining, Blending, Transportation, Storage & Marketing) Rules 2016.

These Rules replaced reliance upon the older 1971 framework for contemporary OGRA licensing of relevant downstream activities.

OGRA’s functions include licensing refined-product marketing, refineries, oil pipelines, oil-storage facilities, lubricant facilities and related regulated businesses.

Oil Marketing Companies

An OMC licence is a regulated business permission.

A prospective investor should verify the exact licence category, status, conditions, infrastructure obligations, depots, supply arrangements, retail network and regulatory history.

A company describing itself as an OMC is not necessarily in the same legal position as a company holding a fully effective marketing licence.

Acquisition due diligence should therefore begin with OGRA status rather than brand recognition.

Establishing an OMC

A new OMC applicant should align its licensing application with the business it actually intends to operate.

Product source, storage, logistics, retail network, land, financing, technical compliance, corporate ownership and supply arrangements should be structured before the licence application is finalised.

Petroleum Storage

Petroleum storage is itself a regulated activity.

A storage facility can require OGRA licensing, land rights, environmental approval, technical compliance, fire and safety measures, insurance, measurement and inventory systems.

Where storage is shared, the contract should deal with ownership of product, commingling, contamination, shortages, measurement discrepancies, throughput, minimum-volume obligations and facility shutdown.

Oil Pipelines

Oil pipelines fall within OGRA’s downstream licensing jurisdiction.

Pipeline projects require careful treatment of route rights, land, environmental approvals, construction standards, capacity, measurement, product quality, line-fill, transportation charges, maintenance, spills, third-party damage and emergency access.

Road Transportation

Road transportation of petroleum products creates a separate risk profile.

OMCs using contract tankers should address vehicle standards, driver obligations, loading and unloading, theft, pilferage, contamination, custody transfer, route security, accidents, insurance and regulatory cooperation.

Outsourcing the tanker does not necessarily outsource the operator’s regulatory or reputational exposure.

Refineries in Pakistan

Greenfield and Brownfield Policy

Pakistan maintains separate policy frameworks for new greenfield refineries and existing brownfield refinery upgrading.

The Pakistan Oil Refining Policy 2023 for New/Greenfield Refineries and the Pakistan Oil Refining Policy 2023 for Existing/Brownfield Refineries should not be treated as interchangeable.

The investment model, incentives, implementation mechanisms and existing-asset issues differ materially.

Brownfield Upgradation

The brownfield framework is intended to facilitate upgrading and modernisation of existing refineries.

Implementation has, however, faced practical and fiscal issues, including questions affecting project economics.

A refinery investor should therefore distinguish between a policy commitment and an incentive which has actually become legally and fiscally implementable.

Greenfield Projects

A new refinery can involve corporate structuring, foreign investment, land, environmental approval, OGRA licensing, crude supply, port infrastructure, pipelines, storage, EPC, technology licensing, customs, taxation, financing, insurance, utilities, product specifications and offtake.

Such projects should be managed through a consolidated regulatory matrix.

EPC and Performance

Refinery EPC contracts should deal with throughput, yield, product specifications, emissions, energy consumption, completion testing, commissioning, delay liquidated damages, performance liquidated damages and interface risk.

A refinery which is mechanically complete but cannot produce the required fuel specification is not commercially complete.

Petroleum Imports, Pricing and Enforcement

Petroleum Product Imports

Imports of crude oil, petroleum products and LNG engage customs, shipping, foreign exchange, letters of credit or other financial instruments, terminal arrangements, inspection, quality, demurrage and onward distribution.

The sale contract should define title, risk, customs responsibility and the method for final quantity and quality determination.

Price Regulation

Pakistan’s petroleum markets contain both regulated and commercial pricing elements.

The legal character of the price must be identified.

A contract should distinguish whether the price is regulator-determined, Government-notified, indexed, negotiated, pass-through or subject to periodic true-up.

The phrase “applicable price” is rarely sufficient for a long-term energy agreement.

Petroleum Amendment Act 2025

The Petroleum (Amendment) Act 2025 strengthened enforcement against petroleum smuggling and illegal petrol-pump operations.

The amendments expanded confiscation powers for specified administrative and Customs authorities, introduced IT-based petroleum tracking and enhanced penalties.

The practical compliance question for legitimate businesses is increasingly one of traceability.

Can the business show where the petroleum came from, where it went and under whose lawful authority it moved?

Land, Surface Rights and Access

Petroleum Rights Do Not Automatically Solve Surface Access

A petroleum right relates to petroleum.

It does not automatically transfer ownership of every parcel of surface land required for seismic, drilling, roads, camps, pipelines, processing or production facilities.

Surface access should therefore be planned as a separate workstream.

The historic practical lesson remains sound: without lawful access, an operator may possess an excellent concession and still be unable to mobilise a rig.

Private Landowners

Where petroleum operations require private land, the operator may need negotiated arrangements addressing occupation, rent, crop and tree compensation, roads, water, fencing, temporary facilities, damage, restoration and access.

The commercial value of land differs according to location and use. Irrigated agricultural land and barren land cannot sensibly be treated as economically equivalent.

Land documentation should also address possession, title disputes, inheritance interests and persons actually cultivating or occupying the land.

Surface Compensation Is Not a Private Petroleum Royalty

Private landowners may have legitimate claims for occupation, disturbance, crops, damage or acquisition compensation.

Those claims are legally distinct from ownership of the petroleum resource.

Surface ownership does not automatically create a private royalty in the hydrocarbons beneath the property.

Keeping these concepts separate is important for both operators and landowners.

Government Land

Government-owned land still requires lawful authority for occupation.

Counsel should identify the public body legally controlling the land and the form of lease, licence, right of way or other permission available to the project.

An informal administrative assurance is not title.

Rights of Way

Pipelines and linear infrastructure frequently rely upon rights of way rather than outright purchase of every parcel.

A right-of-way agreement should address route, width, depth, construction access, inspection, repair, future access, restrictions on building or planting, compensation, crossings, relocation, emergency entry, restoration and third-party interference.

Compulsory Acquisition

The Land Acquisition Act 1894 remains relevant to compulsory acquisition for public purposes.

Certain regulated infrastructure may also engage sector-specific public-purpose certification or acquisition mechanisms.

Compulsory acquisition should, however, be treated as a strategic tool rather than an automatic substitute for negotiated access. Petroleum exploration timelines can be shorter than land-acquisition proceedings.

Special Land Categories

Operations may require additional permissions where they affect canals or drainage works, forests, protected areas, archaeological or cultural sites, fisheries, military or security-sensitive areas, roads, railways or other public infrastructure.

The applicable statute and approving authority depend upon the Province, location and type of land.

Older petroleum guides often assumed a uniform federal or pre-devolution administrative route. A 2026 project requires location-specific analysis.

Foreign Ownership of Land

Foreign investors should not rely upon a blanket proposition that every foreign company with a registered presence in Pakistan may purchase any land it requires.

Land acquisition by a foreign investor can depend upon provincial land law, corporate structure, location, security restrictions, registration practice, approvals and NOC requirements.

A title and regulatory opinion should be obtained before strategic land is acquired.

Environmental Law

Environmental Regulation Is Now Location-Specific

Environmental analysis can no longer be reduced to obtaining clearance from a single federal EPA under the Pakistan Environmental Protection Act 1997.

Following devolution and provincial legislation, the applicable environmental regulator and statute depend substantially upon project location and subject matter.

Sindh, Khyber Pakhtunkhwa and other jurisdictions maintain their own environmental laws and approval systems, while federal environmental law remains relevant in the areas and matters within federal competence.

A 2026 environmental opinion therefore begins with jurisdiction.

IEE and EIA

Depending upon the project, an Initial Environmental Examination, Environmental Impact Assessment or other environmental approval may be required.

The approval is not merely an entry ticket.

Its conditions can regulate construction, waste, wastewater, emissions, monitoring, reporting, rehabilitation and other continuing obligations.

Project Changes

An environmental approval obtained for one design does not necessarily authorise a materially different project.

Expansion, relocation, changed route, increased storage, new process equipment or altered capacity should trigger a review of whether further environmental approval is required.

Environmental Due Diligence

An investor acquiring an existing energy asset should review environmental approvals, compliance reports, monitoring data, spill history, contamination, regulator notices, community complaints and restoration obligations.

A contractual indemnity from a seller is not a substitute for understanding the underlying environmental exposure.

Health, Safety and Oilfield Operations

Sector-Specific Safety Regulation

The historic petroleum safety framework remains important.

The Mines Act 1923, Consolidated Mines Rules 1952 and Oil and Gas (Safety in Drilling and Production) Regulations 1974 contain sector-specific requirements relevant to drilling and production.

At the same time, modern provincial occupational-safety legislation may also apply. The applicable framework should therefore be identified for the particular project and location.

Operational Safety Areas

The 1974 Regulations address a wide range of operational matters, including derricks and masts, platforms and ladders, drilling lines, pipe storage, pumps, well casing, prime movers, blowout prevention, pipelines, wellhead tanks, sour gas and crude, heaters and treaters, compressors, separators, flare systems, well stimulation, swabbing, perforation, drill-stem testing, offshore operations, firefighting, PPE, breathing apparatus, well shut-in, communications, pipeline identification, plugging, excavations, seismic shots and radioactive materials.

The age of the Regulations does not make the operational risks historic.

They remain the kinds of hazards which contemporary HSE systems must address.

Contractors and Subcontractors

Operators commonly rely upon drilling contractors, service companies, transporters and specialist subcontractors.

The contract should define HSE standards, training, PPE, incident reporting, stop-work authority, permit-to-work systems, auditing, subcontractor control, environmental obligations, investigation, insurance and indemnity.

The operator should not assume that outsourcing the physical work automatically transfers all regulatory responsibility.

Major Accidents

After a major accident, several legal questions may arise simultaneously.

There may be regulator reporting, environmental investigation, workplace liability, contractor claims, insurance, third-party injury, property damage and potential criminal proceedings.

Emergency-response plans should therefore include a legal reporting and evidence-preservation protocol.

Foreign Investment and Corporate Entry

Pakistan maintains statutory frameworks for the promotion and protection of foreign investment, including the Foreign Private Investment (Promotion and Protection) Act 1976 and the Foreign Investment (Promotion and Protection) Act 2022.

Treaty protection may also be available depending upon the investor’s nationality, structure and applicable investment agreement.

Foreign investors should consider investment protection at entry.

Restructuring only after a dispute becomes foreseeable can create jurisdictional and treaty problems which early structuring could have avoided.

Foreign Exchange and Repatriation

The Foreign Exchange Regulation Act 1947 and the State Bank of Pakistan’s current Foreign Exchange Manual govern a wide range of cross-border payment and banking issues.

The framework remains dynamic.

During 2026, SBP issued further measures concerning non-resident accounts, securities registration and petroleum/LNG import financing. In April 2026, SBP specifically facilitated issuance of financial instruments and standby letters of credit for crude oil, petroleum-product and LNG imports.

Energy contracts should therefore be drafted against the banking mechanism which will actually be used to perform them.

Repatriation analysis should distinguish among dividends, capital, loan principal, interest, royalties, technical-service fees, assignment proceeds and petroleum-sale proceeds.

Petroleum Taxation

The tax provisions in many older oil and gas guides are now dangerously obsolete.

The contemporary statutory starting point is the Income Tax Ordinance 2001 as amended through the current Finance Act framework. Petroleum operations require particular attention to the Fifth Schedule and the fiscal terms of the applicable petroleum policy and concession.

Sales tax, federal excise, petroleum levy, withholding tax, customs and provincial sales tax on services can also be relevant depending upon the transaction.

For that reason, a modern flagship legal page should not publish a single giant table of rates as though every concession and every transaction were taxed identically.

The correct fiscal answer can depend upon the origin of the petroleum right, policy conversion, residence, permanent establishment, nature of services, importation, financing and the form of transaction.

Royalty Is Not the Same as Tax

Petroleum royalty, income tax, production bonuses, rents, levies and social-welfare obligations arise from different legal and contractual sources.

They should be modelled separately.

Combining them under one generic heading of “tax” can obscure the actual governmental take.

Customs and Imported Equipment

Oilfield operations often require specialised imported equipment.

Contracts should define the importer of record, customs responsibility, temporary importation, security, duties and taxes, re-export, local disposal and the consequences of customs delay.

A drilling rig delayed at port can create exposure far exceeding the cost of careful customs drafting.

Public Procurement

Many Pakistani energy transactions involve state-owned or public-sector entities.

Where public procurement rules apply, defects in tender or award procedure can affect the legality and enforceability of the transaction.

The Supreme Court’s decision in Muhammad Asif v Federation of Pakistan, PLD 2014 SC 206, arising from the SSGC/JJVL LPG arrangements, remains an important reminder that public-resource transactions require defensible process as well as commercially defensible terms.

Competition and Merger Control

Oil and gas regulation does not displace competition law.

The Competition Act 2010 prohibits abuse of dominance, anti-competitive agreements and deceptive practices and establishes merger-control requirements where thresholds are met.

An energy acquisition can therefore require both sector consent and competition clearance.

OGRA approval does not replace Competition Commission approval, and competition clearance does not cure a missing petroleum or OGRA consent.

Petroleum Contracts

The Contracting Landscape

Common petroleum and energy contracts include PCAs, PSAs, JOAs, farm-in and farm-out agreements, assignment deeds, drilling contracts, seismic contracts, oilfield-service agreements, gas sale agreements, crude sale agreements, LNG SPAs, terminal-use agreements, tolling agreements, transportation agreements, storage contracts, O&M agreements, EPC contracts, distributorships and long-term supply agreements.

Each allocates a different species of risk.

Drilling Contracts

A drilling contract should address mobilisation, rig acceptance, day rates, standby, downtime, equipment failure, well control, loss of hole, downhole equipment, pollution, reservoir damage, redrill, direction and control, HSE, insurance, tax, force majeure, termination and indemnity.

The difficult dispute is often not whether a contract exists but which party assumed the physical risk which occurred.

Knock-for-Knock

International oilfield contracts commonly use knock-for-knock indemnities under which each contracting group assumes specified responsibility for its own personnel and property irrespective of fault, subject to negotiated exceptions.

The commercial objective is insurance certainty.

Such provisions should not be copied uncritically from foreign precedent. Enforceability and public-policy constraints depend upon the governing law.

Force Majeure

Petroleum projects can be affected by security incidents, flood, earthquake, civil disruption, government action, import restrictions, port closure, pipeline interruption and other events.

A force-majeure clause should define qualifying events, causation, notice, mitigation, suspension, payment consequences, long-stop termination and the relationship with regulatory deadlines.

A private contractual declaration of force majeure does not automatically bind DGPC or OGRA.

Change in Law

Long-term energy contracts need a reasoned change-in-law mechanism.

The clause should distinguish among changes affecting tax, environmental standards, import rules, product specifications, licensing, network tariffs and the legal ability to continue the project.

Not every change should trigger compensation.

But a contract which assumes the legal environment will remain static for twenty-five years is equally unrealistic.

Stabilisation

Stabilisation clauses require careful drafting.

A contractual mechanism allocating economic consequences of legislative change is not the same thing as a private agreement preventing Parliament from legislating.

The distinction becomes especially important where Government or a state-linked entity is a party.

Oil and Gas Disputes

Forum Comes First

A petroleum dispute may belong before DGPC, OGRA, another statutory authority, an arbitral tribunal, civil court or constitutional High Court.

The correct forum should be identified before aggressive correspondence is sent.

Using the wrong forum can waste time while limitation or statutory appeal periods expire elsewhere.

OGRA Complaints, Appeals and Reviews

OGRA has statutory functions for resolving complaints against licensees and disputes concerning regulated activities.

Current OGRA procedures include complaint-resolution mechanisms and appeals or reviews under its statutory framework.

Parties should identify the current procedural regulations and filing period immediately upon receiving an adverse regulatory decision.

Arbitration

Pakistan continues to use the Arbitration Act 1940 for domestic arbitration.

Foreign commercial awards are governed by the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011, which gives effect to Pakistan’s New York Convention obligations.

ICSID matters are addressed through the Arbitration (International Investment Disputes) Act 2011.

Domestic commercial arbitration, foreign commercial arbitration and investor-State arbitration are distinct regimes and should not be conflated.

Drafting the Arbitration Clause

A good energy arbitration clause should address the seat, institution or ad hoc rules, number of arbitrators, appointment mechanism, governing law, language, scope, interim relief, confidentiality where appropriate and multi-contract coordination.

“Disputes shall be referred to arbitration” is rarely enough.

Multi-Contract Disputes

Energy projects frequently contain several interdependent contracts.

An LNG dispute may involve seller, vessel, terminal, pipeline transporter, gas buyer and public entity.

If each contract contains a different dispute clause, the project may fragment into parallel proceedings.

Dispute-resolution compatibility should therefore be considered when the project documents are drafted.

Judicial Review

Public regulators remain subject to constitutional supervision.

Judicial review may be available where a regulator acts without jurisdiction, breaches procedural fairness, refuses unlawfully to exercise jurisdiction or otherwise acts contrary to law.

Judicial review is not simply an appeal on commercial merits.

A claimant should distinguish between disagreement with the regulator’s assessment and a legally reviewable public-law error.

Important Pakistani Oil and Gas Authorities

Muhammad Asif v Federation of Pakistan — PLD 2014 SC 206

This constitutional case concerned the SSGC/JJVL LPG project and became important for transparency, public-resource management and the legal scrutiny of petroleum-sector contracting.

Its continuing lesson is that transactions involving State entities and natural resources require a defensible process as well as commercial logic.

2014 SCMR 287 — School Van / CNG Safety Proceedings

The Supreme Court’s intervention following the fatal school-van incident demonstrated the public-law dimension of petroleum and CNG safety.

The case is useful as a reminder that technical compliance failures can escalate rapidly into constitutional, regulatory and criminal issues where public safety is affected.

OGRA v Midway II CNG Station — 2014 SCMR 220

The pricing litigation reflected the constitutional and public-welfare dimension of regulated petroleum pricing.

The current pricing system has evolved since that decision, so the case should not be used as a description of the 2026 price formula. Its continuing value lies in the principle that regulated price-setting is susceptible to public-law scrutiny.

Abdul Hakeem Khoso Application — PLD 2014 SC 350

This case addressed the obligations of E&P companies and Government concerning welfare and development of producing areas.

It remains particularly relevant to social-welfare expenditure, governmental enforcement of PCA obligations and the proposition that producing-community commitments are part of the public bargain surrounding resource development.

Due Diligence

Upstream Due Diligence

A proper upstream review may include:

• original petroleum-right award;
• governing Rules and Petroleum Policy;
• exploration licence or development and production lease;
• PCA or PSA and amendments;
• supplemental agreements and policy conversions;
• JOA;
• working-interest schedule;
• assignment history;
• operatorship;
• governmental and provincial participation;
• work commitments and guarantees;
• licence term and extension history;
• relinquishment;
• discoveries and appraisal;
• EWT or early production;
• commerciality and development approval;
• land access;
• environmental approvals;
• material drilling and service contracts;
• gas or crude sale arrangements;
• transportation;
• royalties, bonuses and governmental dues;
• social-welfare obligations;
• litigation and regulatory proceedings;
• abandonment and restoration exposure.

The objective is to answer five questions: what does the client acquire, how long will it survive, what must be spent or performed to preserve it, what liabilities accompany it, and what approvals are required to enter or exit the investment?

Midstream and Downstream Due Diligence

A regulated downstream review may include:

• exact OGRA licence and status;
• licence conditions and renewal;
• change-of-control restrictions;
• depots, terminals and storage;
• retail network;
• technical inspection history;
• environmental approval;
• land and rights of way;
• gas, LNG or petroleum supply agreements;
• transportation and network arrangements;
• pricing and tariff exposure;
• enforcement notices;
• product quality;
• insurance;
• financing and security;
• competition approval;
• litigation and arbitration.

The legal existence of the company is not enough. The operating legality of the asset determines enterprise value.

How Josh and Mak International Can Assist

We can advise foreign E&P companies entering Pakistan, existing petroleum-right holders, minority working-interest owners, operators, non-operators, private gas buyers, LNG developers, OMC applicants, LPG businesses, refineries, contractors, lenders and investors.

Our work can include regulatory opinions, petroleum-title analysis, corporate entry, licence applications, farm-ins, farm-outs, assignments, JOA review, gas-sale structures, LNG agreements, OMC transactions, refineries, pipeline and storage arrangements, land access, environmental compliance, project finance, contractual drafting, regulatory disputes, constitutional petitions, arbitration and enforcement.

For complex cross-border matters, we generally prefer to begin with a defined advisory stage in which the client provides the factual background and documents, we identify the principal regulatory issues and we agree a scope for the initial legal advice or written opinion.

This approach allows the transaction to be tested before substantial capital is committed.

Frequently Asked Questions About Oil & Gas Law in Pakistan

1. What laws govern oil and gas in Pakistan?

There is no single Oil and Gas Act covering the entire sector. Upstream activity principally involves the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act 1948, the applicable onshore or offshore petroleum rules, the Petroleum Exploration and Production Policy, the relevant licence or lease and the PCA or PSA. Midstream and downstream activities engage the OGRA Ordinance and sector-specific gas, LNG, LPG, CNG and oil rules.

2. Who owns oil and natural gas in Pakistan?

Private surface ownership does not automatically include ownership of petroleum. Under Article 172 of the Constitution, mineral oil and natural gas within a Province or adjacent territorial waters are, subject to existing commitments and obligations, jointly and equally vested in the Province and Federal Government, while the constitutional treatment of the continental shelf and waters beyond territorial limits differs.

3. Which authority regulates exploration and production?

DGPC is the principal upstream petroleum authority.

4. What does OGRA regulate?

OGRA licenses regulated activities in natural gas, CNG, LPG, LNG and oil, including specified pipelines, transmission, distribution, sale, storage, refineries and petroleum marketing.

5. Can a foreign company invest in Pakistan’s oil and gas sector?

Yes, subject to the applicable petroleum, corporate, security, tax, investment and foreign-exchange requirements.

6. Must a foreign E&P company establish a Pakistani entity?

The petroleum framework requires the successful participant to establish an appropriate Pakistani legal presence within the applicable timetable. The choice between local incorporation and branch operation should be made after corporate and tax analysis.

7. How are exploration rights awarded?

They may be awarded through competitive bidding or another authorised process under the applicable petroleum framework.

8. What is a reconnaissance permit?

It is a non-exclusive right to undertake defined reconnaissance work. It is not an exclusive exploration licence.

9. What is an exploration licence?

It grants exclusive exploration rights within the licensed area, including drilling, subject to the Rules, licence and PCA.

10. How long does an onshore exploration licence last?

The contemporary initial term may extend to five years, divided into three-year Phase I and two-year Phase II, with renewal possibilities subject to performance and further commitments.

11. Can a petroleum working interest be sold?

Yes, but the transfer must comply with the applicable petroleum documents and obtain the required governmental consent.

12. Is DGPC approval required for a farm-out?

Generally, a transfer of the regulated working interest requires prior governmental approval even where the commercial transaction is described as a farm-out.

13. Does the seller automatically cease to be liable after assignment?

No. The concession documents may preserve specified liability, particularly in partial assignments. Private indemnities do not necessarily alter Government’s rights.

14. Can a private company sell natural gas in Pakistan?

Yes, subject to the applicable upstream entitlement, OGRA licensing and downstream regulatory framework.

15. Can an E&P company sell gas directly to a private buyer?

The amended Petroleum Policy permits private sale of up to the allowed proportion of pipeline-specification gas, subject to the policy conditions and the buyer’s regulatory status.

16. Can private gas use SNGPL or SSGC infrastructure?

Pakistan now has a regulated third-party access framework. Practical access depends upon regulatory requirements, capacity, technical feasibility and tariff arrangements.

17. What is the Pakistan Gas Network Code?

It regulates important operational aspects of gas moving through the network, including matters such as nominations, quality, measurement, capacity and balancing.

18. Is LNG regulated in Pakistan?

Yes. LNG is an established OGRA-regulated sector.

19. Does an LNG terminal require an OGRA licence?

Yes, the applicable OGRA licensing requirements must be satisfied, together with other port, marine, environmental, construction and infrastructure approvals.

20. What contracts are needed for an LNG project?

Depending upon structure, they can include LNG SPA, shipping or charter arrangements, terminal-use or tolling agreement, FSRU arrangements, EPC, pipeline interconnection, transportation, RLNG sale, financing and insurance documents.

21. Is LPG regulated separately?

Yes. LPG has its own licensing and technical framework.

22. Is CNG still regulated?

Yes. CNG marketing and operation require valid OGRA licensing.

23. What licence does an OMC need?

OMCs operate under OGRA’s downstream oil licensing framework and the Pakistan Oil Rules 2016.

24. Can I acquire an existing OMC instead of applying for a new licence?

Potentially, but the acquisition requires regulatory due diligence and consideration of any change-of-control or licence conditions.

25. Are refineries regulated by OGRA?

Yes, refinery licensing falls within OGRA’s downstream oil jurisdiction. Government refinery policies may separately affect investment economics.

26. Can an energy company construct its own petroleum storage?

Potentially, subject to OGRA licensing, land, technical, environmental and safety requirements.

27. Are illegal petrol pumps and smuggled petroleum treated more seriously after 2025?

Yes. The Petroleum (Amendment) Act 2025 strengthened enforcement, confiscation powers, tracking and penalties.

28. Can an E&P company simply enter private land because it holds an exploration licence?

No blanket assumption should be made. Surface access and petroleum title are separate legal questions.

29. Is a landowner entitled to a share of oil or gas produced beneath the land?

Not merely because the person owns the surface. Compensation rights should be distinguished from constitutional ownership of petroleum.

30. Does an oil and gas project need an EIA?

Potentially. The requirement depends upon project type, size and location under the applicable environmental regime.

31. Does an old EIA automatically cover later expansion?

Not necessarily. Material changes in project design or capacity can require fresh review.

32. Who bears historic environmental liability after an acquisition?

That depends upon the transaction structure, statute, facts and contractual allocation. Regulatory liability does not necessarily follow private indemnity drafting.

33. Are abandonment liabilities important in field acquisitions?

Yes. Well plugging, facility removal and restoration can materially affect asset value.

34. Can foreign investors repatriate profits?

Pakistan permits lawful repatriation within the State Bank and foreign-exchange framework. The mechanism differs according to the nature of the payment.

35. Are there special foreign-exchange rules for oil and LNG imports?

Yes. Current SBP rules and 2026 circulars are particularly relevant to petroleum and LNG import financing.

36. How is petroleum income taxed?

The Income Tax Ordinance 2001, including the Fifth Schedule, the applicable Finance Act and the fiscal terms of the petroleum concession all need to be considered.

37. Are foreign oilfield contractors taxed in Pakistan?

They may be, depending upon residence, permanent establishment, source, service location, withholding provisions and any applicable treaty.

38. Can petroleum rights be used as security?

Potentially, subject to the petroleum documents and governmental consent requirements.

39. Does competition law apply to oil and gas companies?

Yes. Sector regulation and competition law operate in parallel.

40. Do public procurement rules affect petroleum contracts?

They can, particularly where a public-sector procuring entity is involved.

41. Can oil and gas disputes be arbitrated?

Yes, depending upon the contract and the nature of the dispute.

42. Are foreign arbitral awards enforceable in Pakistan?

Pakistan has implemented the New York Convention through the Recognition and Enforcement Act 2011, subject to the statutory enforcement process and available defences.

43. Can an OGRA decision be challenged?

Yes, but the statutory appeal or review route and limitation period must be identified immediately.

44. Can DGPC or another petroleum authority be challenged in the High Court?

Potentially through constitutional judicial review where recognised public-law grounds are present and other jurisdictional requirements are satisfied.

45. What documents should an investor provide for upstream due diligence?

The petroleum right, licence or lease, PCA or PSA, amendments, JOA, assignment history, regulatory approvals, work status, guarantees, environmental material, land documents, material contracts and dispute correspondence are ordinarily central.

46. Can legal advice be obtained before commercial terms are final?

Yes. That is often the best time to structure the regulatory and risk-allocation issues.

47. Can Josh and Mak International advise a foreign company remotely?

Yes. Cross-border energy instructions can ordinarily begin through electronic document review, written instructions and remote conferences.

48. Can the firm prepare a written market-entry or transaction opinion?

Yes. A scoped legal and commercial opinion can address corporate entry, petroleum or OGRA regulation, land, environmental issues, tax, foreign exchange, contracts, financing and dispute strategy.

49. Can the firm advise landowners affected by petroleum operations?

Yes. We can advise on title, occupation, compensation, acquisition, rights of way, crop or property damage and related disputes.

50. Can the firm assist an operator facing land-access resistance?

Yes. The appropriate strategy may involve title review, negotiation, compensation documentation, rights of way, Government coordination or statutory mechanisms.

Key Current Legal and Regulatory Instruments for 2026

The principal instruments commonly encountered in Pakistani oil and gas work include:

• Constitution of the Islamic Republic of Pakistan, particularly Articles 158 and 172;
• Regulation of Mines and Oilfields and Mineral Development (Government Control) Act 1948;
• Pakistan Onshore Petroleum (Exploration and Production) Rules 2013, as amended;
• Pakistan Offshore Petroleum (Exploration and Production) Rules 2023;
• Petroleum Exploration and Production Policy 2012, as amended;
• Tight Gas (Exploration and Production) Policy 2024;
• Model Petroleum Concession Agreement 2013, amended January 2024;
• current Model Production Sharing Agreement for offshore operations;
• Oil and Gas Regulatory Authority Ordinance 2002, as amended;
• Natural Gas Regulatory Authority (Licensing) Rules 2002;
• Natural Gas Tariff Rules 2002;
• OGRA Gas (Third Party Access) Rules 2018;
• Pakistan Gas Network Code;
• OGRA (LNG) Rules 2007;
• CNG (Production and Marketing) Rules 1992, as amended;
• Pakistan Oil (Refining, Blending, Transportation, Storage & Marketing) Rules 2016;
• Pakistan Oil Refining Policy 2023 for New/Greenfield Refineries;
• Pakistan Oil Refining Policy 2023 for Existing/Brownfield Refineries and subsequent implementation material;
• Petroleum Act 1934 and the Petroleum (Amendment) Act 2025;
• Oil and Gas (Safety in Drilling and Production) Regulations 1974;
• Mines Act 1923 and relevant safety rules;
• Territorial Waters and Maritime Zones Act 1976;
• Land Acquisition Act 1894;
• Pakistan Environmental Protection Act 1997 where applicable and the relevant provincial environmental statutes and regulations;
• Foreign Exchange Regulation Act 1947 and current State Bank Foreign Exchange Manual;
• Income Tax Ordinance 2001, including the Fifth Schedule, as amended;
• Sales Tax Act 1990, Federal Excise Act 2005 and other applicable fiscal legislation;
• Competition Act 2010;
• applicable federal or provincial public procurement legislation;
• Arbitration Act 1940;
• Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011; and
• Arbitration (International Investment Disputes) Act 2011.

The correct list for a particular project will depend upon where the project is located and what the client is actually doing.

Instructing Josh and Mak International

Josh and Mak International is a professional legal practice. Transaction-specific legal advice is provided on a paid and properly scoped basis.

Prospective clients should send a concise description of the proposed investment, project, transaction or dispute; identify the relevant companies and counterparties; and provide the principal available documents.

For complex petroleum, LNG, OMC, infrastructure, foreign-investment or cross-border matters, a paid initial consultation or scoped written legal and commercial opinion will usually be the most efficient starting point.

Once the legal position has been established, subsequent work can include transaction structuring, drafting, negotiations, regulatory applications, correspondence, due diligence, arbitration or litigation.

Why Josh and Mak International?

Oil and gas law rewards lawyers who understand the commercial project rather than merely the statute.

The same petroleum rule can produce different consequences for the operator, a minority working-interest owner, a lender, a foreign contractor, a landowner, an OMC applicant or the buyer of a mature producing field.

Our approach is therefore transactional and problem-led.

For an E&P company, that may mean title, work obligations, JV structure and Government approvals.

For a gas producer, it may mean commercialisation and network access.

For an LNG developer, it may mean aligning international supply, terminal and domestic transportation contracts.

For an OMC or refinery, it may mean licensing, infrastructure and regulatory compliance.

For an investor, it may mean due diligence, tax, foreign exchange and exit.

For a contractor, it may mean payment, HSE, customs, tax and operational indemnities.

For a landowner, it may mean protecting legitimate surface and compensation rights.

The common question is always the same: how does the law alter the commercial bargain?

Conclusion

Pakistan’s petroleum sector presents real opportunity, but it operates through a dense and interconnected framework of constitutional ownership, petroleum rights, regulatory licences, environmental obligations, infrastructure access, taxation, foreign exchange and contract.

The upstream investor must understand title, work commitments, Government participation and concession obligations.

The gas producer must understand both production entitlement and route to market.

The LNG investor must integrate international commodity contracts with Pakistani terminal, transport and licensing law.

The OMC must establish the legal provenance, storage, movement and retail distribution of petroleum.

The foreign investor must understand entry, tax, financing and repatriation.

The project company must obtain lawful land and environmental approvals.

The contractor must allocate operational and HSE risk.

And every participant should consider at the outset how it intends eventually to finance, transfer, enforce or exit the investment.

Oil and gas law is therefore not the law of a single licence.

It is the law of the whole project.

Josh and Mak International

Oil, Gas, Petroleum, LNG and Energy Lawyers — Pakistan

Website: www.joshandmakinternational.com

Email: Aemen@joshandmak.com

Telephone / WhatsApp: +92-304-8734889