Petroleum as a Provincial Subject During the Pre-Pakistan Period

Before the creation of Pakistan, petroleum was owned by the provincial governments of British India. This historical context is crucial to understanding the evolution of petroleum rights in the region.

 Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948

The Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948, empowers the government to regulate the grant of petroleum concessions but does not explicitly state that petroleum constitutes government property. Section 2(7) of the Act, which allows the government to fix prices at which petroleum may be bought or sold, suggests that petroleum rights may vest in private parties. If the government were the owner, it could set prices without needing such provisions. Thus, the Act leaves the ownership of petroleum rights uncertain, raising questions about whether these rights vest in the government or subsist with landowners.

 Ownership of Offshore Petroleum Post-1973 Constitution

Article 172(2) of the Constitution of the Islamic Republic of Pakistan, 1973, vests all lands, minerals, and other valuable resources within the continental shelf or territorial waters of Pakistan in the Federal Government. This enables the Federal Government to enter into exploration and other agreements concerning these resources.

Additionally, the Territorial Waters and Maritime Zone Act, 1976, defines the limits of Pakistan’s territorial waters as twelve nautical miles beyond its land territory and internal waters. Sections 6 and 8 of the Act extend Pakistan’s exclusive economic zone to 200 nautical miles, allowing the Federal Government to grant petroleum exploration and production rights within this zone. Pakistan’s agreements with adjacent countries, such as India and Iran, confirm these boundaries, with no significant disputes except minor fishing claims.

Consequently, companies granted petroleum rights by the Government of Pakistan within its offshore jurisdiction have access to these areas for their operations.

 Ownership of Onshore Petroleum Post-1961

The Minerals (Acquisition and Transfer) Order, 1961, vests all mineral rights, including petroleum, within Pakistan’s land territory in the Federal Government. This order overrides any contrary laws, customs, agreements, or court orders, ensuring that all mineral rights are centralized under the Federal Government.

Key Provisions of the 1961 Order:

  • Definition of Minerals: The order defines minerals to include all natural deposits of ores, metals, fuel, oil, and gas.
  • Vesting of Mineral Rights: All minerals and associated rights are acquired by and vested in the Federal Government, free from encumbrances.
  • Validity of Previous Agreements: Any lease or concession granted, or agreement made before the order’s commencement, is deemed to have been granted or made on behalf of the Federal Government.
  • Bar of Jurisdiction: The provisions of the order cannot be questioned in any court of law.

The 1961 Order does not specify where mineral rights vested prior to its enactment, suggesting it may be declaratory, affirming the Federal Government’s ownership. The absence of compensation to landowners for the acquisition of mineral rights supports this interpretation, indicating that mineral rights likely vested in the government even before the order.

The ownership of petroleum rights in Pakistan has evolved from provincial ownership during the British India period to federal ownership post-1948 and 1961 regulations. While the 1948 Act introduced regulatory controls without explicitly vesting ownership in the government, the 1961 Order and the 1973 Constitution clarified the federal ownership of both onshore and offshore petroleum rights. This centralized ownership framework allows the Federal Government to manage and regulate petroleum exploration and production effectively, ensuring strategic control over the country’s valuable natural resources.

By The Josh and Mak Team

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