The Model Supplemental Agreement to the Petroleum Concession Agreement (PCA) for the adoption of S.R.O. 641(I)/2023 represents a critical legal instrument in the energy sector of Pakistan. This agreement aims to integrate recent regulatory amendments into existing petroleum exploration and production frameworks, ensuring compliance and updating contractual relationships.

Background

On 30th May 2023, the Government of Pakistan, through the Ministry of Energy, issued S.R.O. 641(I)/2023, which introduced significant amendments to the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013. These amendments also affect the older regulations, namely the Pakistan Petroleum (Exploration and Production) Rules of 1986, 2001, and 2009. Consequently, any Petroleum Concession Agreements (PCAs) in force needed to be updated to reflect these regulatory changes.

Purpose of the Supplemental Agreement

The primary objective of this Supplemental Agreement is to adopt the amendments brought by S.R.O. 641(I)/2023 into the existing PCA between the Government of Pakistan and the petroleum exploration company. This ensures that all parties to the PCA are aligned with the updated regulatory framework, thereby maintaining legal and operational coherence.

Key Provisions

  1. Parties Involved:
    • The President of the Islamic Republic of Pakistan, acting through the Ministry of Energy.
    • XYZ Limited, the petroleum exploration company.
    • Government Holdings (Private) Limited (GHPL), if applicable.
    • Provincial Government Holdings (Private) Limited (PHC), if applicable.
  2. Recitals:
    • Acknowledgement of the original Petroleum Exploration Licence and PCA granted to XYZ Limited.
    • Recognition of the amendments introduced by S.R.O. 641(I)/2023.
    • Agreement to incorporate these amendments into the existing PCA.
  3. Amendments to PCA:
    • Definition Updates: The term “Rules” within the PCA is updated to include Rule 80(4) of the Pakistan Onshore Petroleum (Exploration & Production) Rules, 2013, as amended by S.R.O. 641(I)/2023. This ensures that all relevant regulatory provisions are encompassed within the PCA.
    • Adoption Date: The effective date for these amendments is set as 30th May 2023.
  4. Conflict Resolution:
    • In the event of any conflict between the provisions of this Supplemental Agreement and the original PCA, the terms of the Supplemental Agreement will prevail. This clause ensures that the latest regulatory amendments take precedence over previous contractual terms.
  5. Execution and Counterparts:
    • The Supplemental Agreement will be executed in two counterparts, each considered an original, thus ensuring that both parties retain a copy of the agreement. This clause reinforces the binding nature of the agreement on all involved parties.

The Model Supplemental Agreement to the Petroleum Concession Agreement for the adoption of S.R.O. 641(I)/2023 is an essential document that aligns the contractual framework of petroleum exploration and production with the latest regulatory amendments in Pakistan. By incorporating these changes, the agreement ensures legal compliance and operational clarity for all parties involved, facilitating the continued exploration and production of petroleum resources within the country.

This detailed client information article aims to provide a comprehensive understanding of the importance and implications of the Model Supplemental Agreement, highlighting its role in maintaining up-to-date and legally sound contractual relationships in Pakistan’s energy sector. For further details or specific legal advice regarding this agreement, please consult with a qualified legal professional at Josh and Mak International.

Questions and Answers on the Model Supplemental Agreement to Petroleum Concession Agreement for Adoption of S.R.O. 641(I)/2023

Q1: What is the purpose of the Model Supplemental Agreement to the Petroleum Concession Agreement (PCA)?

A1: The purpose of the Model Supplemental Agreement is to incorporate the amendments introduced by S.R.O. 641(I)/2023 into the existing Petroleum Concession Agreement. This ensures that the PCA aligns with the updated Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013, and maintains compliance with current regulatory standards.

Q2: Who are the parties involved in the Supplemental Agreement?

A2: The parties involved in the Supplemental Agreement are:

  1. The President of the Islamic Republic of Pakistan, through the Ministry of Energy.
  2. XYZ Limited, a company incorporated under the laws of Pakistan.
  3. Government Holdings (Private) Limited (GHPL), if applicable.
  4. Provincial Government Holdings (Private) Limited (PHC), if applicable.

Q3: What are the key amendments made by S.R.O. 641(I)/2023?

A3: S.R.O. 641(I)/2023 introduces amendments to the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013, which also impact the rules of 1986, 2001, and 2009. The specific amendment relevant to the PCA is the addition of Rule 80(4) to the existing Rule 80(3) in the definition of “Rules” within the PCA.

Q4: What is the effective date of the amendments incorporated by the Supplemental Agreement?

A4: The effective date of the amendments incorporated by the Supplemental Agreement is 30th May 2023. This date is referred to as the “Adoption Date” in the agreement.

Q5: How does the Supplemental Agreement affect the original Petroleum Concession Agreement?

A5: The Supplemental Agreement amends the original PCA to include the new regulatory provisions introduced by S.R.O. 641(I)/2023. Specifically, it updates the definition of “Rules” to encompass Rule 80(4) of the Pakistan Onshore Petroleum (Exploration & Production) Rules, 2013. Apart from this amendment, all other provisions of the original PCA remain unchanged and in full force.

Q6: What happens in the event of a conflict between the provisions of the Supplemental Agreement and the original PCA?

A6: In the event of a conflict between the provisions of the Supplemental Agreement and the original PCA, the terms of the Supplemental Agreement will prevail to the extent of the amendment provided. This ensures that the latest regulatory amendments take precedence.

Q7: How is the Supplemental Agreement executed and documented?

A7: The Supplemental Agreement is executed in two counterparts, with each party retaining one copy. Both counterparts are considered originals and together constitute one and the same agreement. This formal execution process ensures that the agreement is legally binding on all parties involved.

Q8: What does the term “PCA” mean in the context of the Supplemental Agreement?

A8: In the context of the Supplemental Agreement, “PCA” refers to the Petroleum Concession Agreement, as mentioned in the recitals, which may have been amended from time to time. It represents the foundational agreement governing the exploration and production activities between the government and the exploration company.

Q9: What is the significance of updating the definition of “Rules” in the PCA?

A9: Updating the definition of “Rules” in the PCA to include the amendments introduced by S.R.O. 641(I)/2023 ensures that the agreement is aligned with the current regulatory framework. This is crucial for maintaining legal compliance and operational clarity, as it incorporates the latest rules governing petroleum exploration and production.

Q10: What are the implications for the parties involved if they do not adopt the Supplemental Agreement?

A10: If the parties do not adopt the Supplemental Agreement, they risk non-compliance with the updated regulatory framework introduced by S.R.O. 641(I)/2023. This could lead to legal and operational challenges, as their activities would not be aligned with the current rules governing petroleum exploration and production in Pakistan.

Q11: What is the role of Government Holdings (Private) Limited (GHPL) and Provincial Government Holdings (Private) Limited (PHC) in the Supplemental Agreement?

A11: GHPL and PHC, if applicable, are parties to the Supplemental Agreement, representing the interests of the federal and provincial governments in the petroleum exploration and production activities. Their inclusion ensures that the interests of both levels of government are considered and aligned with the updated regulatory framework.

Q12: How does the Supplemental Agreement impact the Joint Operating Agreement (JOA)?

A12: The Supplemental Agreement does not directly impact the Joint Operating Agreement (JOA). However, since the JOA is part of the Concession Documents along with the PCA, any amendments to the PCA, including those introduced by the Supplemental Agreement, could indirectly influence the JOA by changing the overall regulatory environment in which the joint operations are conducted.

By The Josh and Mak Team

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