The Model Petroleum Exploration Licence in Pakistan, governed by the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013, provides a comprehensive legal framework for the exploration and exploitation of petroleum resources within the country. This document serves as an essential guide for entities engaged in petroleum exploration activities, detailing the rights, obligations, and procedures to be followed to ensure compliance with national regulations.

To facilitate a deeper understanding of the Model Petroleum Exploration Licence, we have compiled 100 detailed questions and answers. These Q&As cover various aspects of the licence, including the legal provisions, operational requirements, security measures, environmental protections, and the roles and responsibilities of the involved parties. This resource aims to provide clarity on the intricate details of the licence and assist stakeholders in navigating the regulatory landscape effectively.

Through these Q&As, our clients, company representatives, and other stakeholders can gain valuable insights into the practical implications of the licence, ensuring that their activities align with the prescribed legal and regulatory standards. Whether you are initiating new exploration projects or seeking to maintain compliance with existing licences, this comprehensive guide serves as a critical resource for informed decision-making and successful operations in Pakistan’s petroleum sector.

Q: What is the primary legal framework governing the Model Petroleum Exploration Licence? A: The Model Petroleum Exploration Licence is governed by the Pakistan Onshore Petroleum (Exploration and Production) Rules, 2013, which set forth the provisions and conditions for granting exploration licences in Pakistan.

Q: Who grants the Petroleum Exploration Licence? A: The Petroleum Exploration Licence is granted by the President of the Islamic Republic of Pakistan.

Q: Who are the typical parties involved in a Petroleum Exploration Licence? A: The typical parties involved are the President of Pakistan, the company XYZ, Government Holdings (Private) Limited (GHPL), and, if applicable, a Provincial Holding Company.

Q: What exclusive rights does the Licence grant to the Licensee(s)? A: The Licence grants the Licensee(s) the exclusive right to perform activities related to the exploration for and exploitation of petroleum within the specified Licence Area.

Q: How is the Licence Area defined in the Licence? A: The Licence Area is defined by specific coordinates and its extent in square kilometres, as shown in an attached Annexure-A.

Q: What is the initial period of validity for the Licence? A: The initial period of validity for the Licence is five years, divided into two phases: the first phase of three years and the second phase of two years.

Q: Are there any provisions for renewal of the Licence? A: Yes, the Licensee(s) are entitled to two renewals of one year each, as provided in the Rules.

Q: What obligations must the Licensee(s) fulfill during the initial term? A: The Licensee(s) must undertake the Minimum Work obligations as specified in Rule 21(2), which include various exploration activities.

Q: What happens if the Licensee(s) fail to complete the work programme within the specified time limits? A: If the Licensee(s) fail to complete the work programme within the specified time limits, they must pay liquidated damages to the Federal Government as per Rule 28 of the Rules.

Q: What agreements must the Licensee(s) enter into after being granted the Licence? A: The Licensee(s) must enter into a Concession Agreement, including a Joint Operating Agreement with the Federal Government, within thirty days of the Licence being granted.

Q: What is the role of the Pakistan Atomic Energy Commission in the exploration process? A: The discovery of minerals necessary for the generation of nuclear energy must be reported to the Pakistan Atomic Energy Commission and the Authority. The Licensee(s) cannot develop or exploit such minerals without prior approval from the Commission.

Q: Can exploration work be carried out over areas already granted under mining leases or prospecting licences? A: No, exploration work cannot be carried out over such areas without prior approval from the Provincial Government and the companies concerned.

Q: What must Licensee(s) do upon discovering any mineral ore in the Licence Area? A: The Licensee(s) must report the discovery to the Provincial Government immediately. However, they do not have the right to exploit these minerals unless granted a formal mining concession by the Provincial Government.

Q: Are operations allowed within municipal limits? A: No, operations are not allowed within municipal limits without prior approval.

Q: What security measures must Licensee(s) undertake during exploration? A: Licensee(s) must inform the Authority about their personnel’s visit plans to the Licence Area, and coordinate protection of personnel with local civil administration prior to commencing work.

Q: How should unskilled labour be sourced for exploration activities? A: Unskilled labour should be sourced from the local inhabitants, with preference given to displaced landowners. Other manpower should also be sourced locally if available.

Q: What restrictions are there on the use of forest and other government lands? A: Licensee(s) must not damage forest and mineral property and must obtain permission to use forest roads, maintaining them properly. They must also pay suitable rent if using forest or other government land.

Q: Are there any special requirements for aerial survey/photography in the Licence Area? A: Yes, aerial survey/photography is not allowed without clearance from the Authority and security agencies. If allowed, it must be conducted by the Survey of Pakistan.

Q: What must Licensee(s) do if their activities cause damage to public or private property? A: Licensee(s) must pay adequate compensation for any damage caused to public or private property.

Q: How must Licensee(s) handle the reporting of data and test results? A: Data and test results must not be exported outside Pakistan without prior clearance from the Authority.

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Q: What are the obligations regarding worker safety and environmental protection? A: Licensee(s) must follow the Mines Act, 1923, and related rules and regulations for worker safety, health, and welfare. They must also adhere to environmental protection and pollution control laws and guidelines issued by the Federal Government.

Q: What must be done regarding the engagement of foreign nationals for exploration activities? A: Foreign nationals must be security cleared prior to their arrival in Pakistan. They should be registered with the concerned Foreigners Registration Office, and their details must be provided to the Provincial Government.

Q: What are the conditions for constructing roads/tracks in the Licence Area? A: Roads/tracks cannot be constructed without clearance from security agencies, and they must be rendered unserviceable when no longer required, in consultation with local Formation Headquarters.

Q: Are Licensee(s) allowed to disclose information about the terrain to external parties? A: No, Licensee(s) cannot disclose information about the terrain to any individual or agency without clearance from the General Headquarters (MI Directorate) through the Authority.

Q: What are the guidelines for the engagement of locals in the exploration activities? A: Locals should be given preference for employment and sub-contracts, provided their terms are competitive.

Q: What must be done if illegal activities, such as hunting or trapping of wild animals, are discovered? A: If illegal activities are discovered, the NOC of the Provincial Government may be liable to cancellation, and penalties can be imposed as per the law.

Q: Are there any restrictions on the use of Global Positioning Systems (GPS) in the Licence Area? A: Yes, the use of GPS is restricted and requires prior permission from the concerned agencies.

Q: What is the procedure for obtaining maps for the Licence Area? A: Licensee(s) must approach the Survey of Pakistan for the issuance of maps, following the prescribed procedure, and individuals handling restricted maps need security clearance.

Q: What are the requirements regarding advance information about the exploration programme? A: All companies, local and foreign, must provide advance information and details about the exploration programme to local civil administration and the Authority.

Q: What are the obligations for worker safety and welfare under the Mines Act, 1923? A: Licensee(s) must ensure compliance with the worker safety, health, and welfare laws as contained in the Mines Act, 1923, and related regulations.

Q: What must Licensee(s) do to protect vital installations during exploration? A: Licensee(s) must take necessary precautions to safeguard vital installations such as microwave towers, irrigation regulators, and other public and private buildings.

Q: How should Licensee(s) coordinate with local civil administration regarding security arrangements? A: Licensee(s) must inform the local civil administration about their programme and purpose of visits to the Licence Area to ensure necessary security arrangements.

Q: What measures should be taken to avoid border violations? A: Licensee(s) must ensure that no activity is carried out within 4,000 meters of the international border and that no border violations occur.

Q: What is the protocol for obtaining permissions for flying over the Licence Area? A: Flying over the Licence Area is not allowed without permission from the concerned security agencies.

Q: How should Licensee(s) handle the employment of expatriates? A: Licensee(s) must follow strict guidelines and ensure expatriates of specified countries are not employed. A liaison officer from the Ministry of Petroleum & Natural Resources will oversee the project and activities.

Q: Are there any special requirements for protecting public and private property during exploration? A: Yes, Licensee(s) must ensure that operations do not affect or abridge the rights of private property owners and must follow the necessary legal procedures.

Q: What must be done if exploration activities interfere with existing grazing or felling rights? A: Licensee(s) must not interfere with existing grazing or felling rights and must compensate for any losses caused to public or private property.

Q: How should Licensee(s) handle the transportation of equipment across irrigation channels? A: Special approval must be obtained for crossing channels with heavy machinery, and the limits of loading capacities must be observed. Repairs and replenishing costs must be deposited in advance.

Q: What are the guidelines for handling forest property during exploration? A: Licensee(s) must ensure no damage occurs to forest property and must follow the provisions of the Forest Act and other applicable rules.

Q: What must be done regarding investment in social welfare schemes and training? A: Investment in social welfare schemes and training must be made in accordance with the Petroleum Exploration and Production Policy 2012 and guidelines issued by the Federal Government.

Q: What are the requirements for environmental protection during exploration? A: Licensee(s) must follow the environmental protection and pollution control laws and guidelines notified by the Federal Government.

Q: How should Licensee(s) manage the engagement of skilled and unskilled labour? A: Skilled and unskilled labour should preferably be sourced from the local population, giving priority to displaced landowners and available local manpower.

Q: What should Licensee(s) do if they need to use forest roads? A: Licensee(s) must obtain permission to use forest roads and are responsible for their proper maintenance.

Q: Are Licensee(s) allowed to export data and test results outside Pakistan? A: No, Licensee(s) must not export data and test results outside Pakistan without prior clearance from the Authority.

Q: What must Licensee(s) do before commencing exploration on privately owned land? A: Licensee(s) must pay proper compensation to the owners of the land before commencing exploration activities.

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Q: How should Licensee(s) handle visits and photography in sensitive areas? A: Visits and photography in sensitive areas require special clearance, and all activities must be coordinated with local Formation Headquarters.

Q: What is the protocol for handling mapping information? A: All mapping information, including sketches and photography, must not be released to anyone except as permissible under the Concession Agreement and relevant rules.

Q: Are there any restrictions on building permanent structures in the Licence Area? A: Yes, Licensee(s) cannot construct permanent structures without prior approval from the Authority.

Q: What must be done if Licensee(s) need to undertake operations near irrigation structures? A: Licensee(s) must inform the local irrigation authorities in advance and ensure that operations do not damage irrigation structures or interfere with the normal flow of irrigation supplies.

Q: How should Licensee(s) manage the movement of personnel and vehicles? A: All movement of personnel and vehicles must be coordinated with the concerned Formation Headquarters to ensure security and proper management.

Q: What are the conditions for conducting aerial surveys in the Licence Area? A: Aerial surveys must be approved by the Authority and security agencies, and, if allowed, must be carried out by the Survey of Pakistan.

Q: What measures must be taken to ensure the safety of vital installations? A: Licensee(s) must provide advance information about exploration activities and take necessary precautions to safeguard vital installations.

Q: What must Licensee(s) do regarding the engagement of foreign nationals? A: Licensee(s) must ensure that foreign nationals involved in exploration are security cleared and registered with the concerned authorities.

Q: Are there any restrictions on using existing roads and infrastructure for exploration activities? A: Yes, Licensee(s) must obtain necessary permissions and ensure proper maintenance of any used roads and infrastructure.

Q: How should Licensee(s) handle the discovery of minerals not related to petroleum? A: Licensee(s) must report the discovery of such minerals to the Provincial Government and cannot exploit them without a formal mining concession.

Q: What is the role of local civil administration in the Licence Area? A: Local civil administration must be informed about exploration activities, and necessary security arrangements must be coordinated with them.

Q: How should Licensee(s) manage the payment of advance rent for using government land? A: Licensee(s) must deposit advance rent in the Federal Government treasury as prescribed in Rule 29 of the Rules.

Q: What must be done if exploration activities affect private property rights? A: Licensee(s) must follow the necessary legal procedures and ensure proper compensation is paid to private property owners.

Q: Are Licensee(s) allowed to interfere with existing agricultural activities? A: No, Licensee(s) must not interfere with existing agricultural activities without prior approval.

Q: What are the guidelines for the construction and maintenance of tracks in the Licence Area? A: Tracks must be constructed with clearance from security agencies and in consultation with local Formation Headquarters, and rendered unserviceable when no longer needed.

Q: How should Licensee(s) handle the engagement of local subcontractors? A: Local subcontractors should be considered for grants of sub-contracts provided their terms are competitive.

Q: What must Licensee(s) do if their activities result in the discovery of minerals necessary for nuclear energy? A: Such discoveries must be reported to the Pakistan Atomic Energy Commission and the Authority, and Licensee(s) cannot develop or exploit these minerals without approval.

Q: What are the requirements for worker safety during exploration activities? A: Worker safety must be ensured by following the laws and regulations contained in the Mines Act, 1923.

Q: How should Licensee(s) handle the reporting of exploration activities to the local civil administration? A: Licensee(s) must provide advance information about the exploration programme to local civil administration and the Authority.

Q: What are the protocols for handling sensitive areas during exploration? A: Sensitive areas must be avoided, and special clearance must be obtained for any necessary activities. All actions must be coordinated with concerned security agencies.

Q: How should Licensee(s) manage their personnel’s visits to the Licence Area? A: Licensee(s) must inform the Authority about the programme and specific purpose of visits to ensure necessary security arrangements are made.

Q: Are there any restrictions on disclosing information about the terrain? A: Yes, disclosing information about the terrain to any individual or agency requires clearance from the General Headquarters (MI Directorate) through the Authority.

Q: What are the guidelines for handling the use of canals and irrigation structures during exploration? A: Operations must be conducted at a reasonable distance from irrigation structures, and any necessary work requires consultation and approval from the concerned Department of the Provincial Government.

Q: What must Licensee(s) do to ensure compliance with environmental protection laws? A: Licensee(s) must strictly follow the environmental protection and pollution control laws and guidelines issued by the Federal Government.

Q: What should be done if exploration activities necessitate the use of forest roads? A: Permission must be obtained for the use of forest roads, and Licensee(s) are responsible for their proper maintenance.

Q: How should Licensee(s) handle the engagement of expatriates for exploration? A: Expatriates must be security cleared, registered with the relevant authorities, and follow the guidelines issued by the Ministry of Interior.

Q: What measures must be taken to protect vital installations during exploration? A: Licensee(s) must take necessary precautions and inform local civil administration and the Authority to safeguard vital installations.

Q: Are there any restrictions on the use of existing infrastructure for exploration activities? A: Yes, necessary permissions must be obtained, and proper maintenance of any used infrastructure must be ensured.

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Q: What should Licensee(s) do if their activities result in the discovery of mineral ore? A: The discovery must be reported to the Provincial Government, and Licensee(s) cannot exploit the minerals without a formal mining concession.

Q: How should Licensee(s) handle the engagement of skilled labour? A: Skilled labour should preferably be sourced locally, and necessary training should be provided to ensure compliance with safety and operational standards.

Q: What are the requirements for reporting data and test results? A: Data and test results must be reported to the Authority and cannot be exported without prior clearance.

Q: How should Licensee(s) manage their personnel’s movement and activities in the Licence Area? A: Personnel movement and activities must be coordinated with local civil administration and security agencies to ensure safety and compliance with regulations.

Q: What are the guidelines for the engagement of local manpower? A: Local manpower should be given preference, and unskilled labour should be sourced from the local inhabitants, particularly displaced landowners.

Q: What must Licensee(s) do if their activities cause damage to irrigation structures? A: Licensee(s) must ensure that operations do not damage irrigation structures, and any necessary repairs must be coordinated with and approved by the concerned Department of the Provincial Government.

Q: How should Licensee(s) handle the reporting of exploration activities to the Authority? A: Licensee(s) must provide regular reports on their activities, including data and test results, to the Authority for review and approval.

Q: Are there any special requirements for conducting surveys in the Licence Area? A: Surveys, especially aerial surveys, require clearance from the Authority and security agencies and must be conducted by the Survey of Pakistan if approved.

Q: What are the guidelines for handling compensation for damages caused during exploration? A: Licensee(s) must pay adequate compensation for any damage caused to public or private property during exploration activities.

Q: How should Licensee(s) handle the engagement of subcontractors? A: Subcontractors should be engaged based on competitive terms, with preference given to local contractors if available.

Q: What are the protocols for handling sensitive information during exploration? A: Sensitive information, including mapping data and test results, must be handled in accordance with the Concession Agreement and relevant rules, and must not be disclosed without clearance.

Q: What must Licensee(s) do if their activities affect grazing or felling rights? A: Licensee(s) must not interfere with existing grazing or felling rights and must compensate for any losses caused to public or private property.

Q: Are there any restrictions on constructing permanent structures in the Licence Area? A: Yes, Licensee(s) cannot construct permanent structures without prior approval from the Authority.

Q: What should be done if exploration activities necessitate the use of restricted maps? A: Licensee(s) must approach the Survey of Pakistan for the issuance of maps, and individuals handling restricted maps need security clearance.

Q: How should Licensee(s) handle the engagement of local civil administration for security arrangements? A: Licensee(s) must inform local civil administration about their programme and specific purpose of visits to ensure necessary security arrangements are made.

Q: What are the guidelines for handling the reporting of mineral discoveries? A: Mineral discoveries must be reported to the Provincial Government immediately, and Licensee(s) cannot exploit these minerals without a formal mining concession.

Q: What must Licensee(s) do if their activities interfere with irrigation supplies? A: Licensee(s) must ensure that operations do not interfere with irrigation supplies and must coordinate with the concerned Department of the Provincial Government for necessary approvals.

Q: How should Licensee(s) manage the engagement of unskilled labour? A: Unskilled labour should be sourced from the local inhabitants, with preference given to displaced landowners.

Q: What are the requirements for handling the use of forest property during exploration? A: Licensee(s) must ensure no damage occurs to forest property and must follow the provisions of the Forest Act and other applicable rules.

Q: What measures must be taken to ensure compliance with environmental protection laws? A: Licensee(s) must follow the environmental protection and pollution control laws and guidelines issued by the Federal Government.

Q: What must be done if exploration activities affect private property rights? A: Licensee(s) must follow the necessary legal procedures and ensure proper compensation is paid to private property owners.

Q: Are there any restrictions on the use of existing roads and infrastructure for exploration activities? A: Yes, necessary permissions must be obtained, and proper maintenance of any used roads and infrastructure must be ensured.

Q: How should Licensee(s) handle the reporting of exploration activities to the Authority? A: Licensee(s) must provide regular reports on their activities, including data and test results, to the Authority for review and approval.

Q: What are the protocols for handling the engagement of foreign nationals? A: Foreign nationals must be security cleared, registered with the relevant authorities, and follow the guidelines issued by the Ministry of Interior.

Q: How should Licensee(s) manage the engagement of local subcontractors? A: Local subcontractors should be considered for grants of sub-contracts provided their terms are competitive.

Q: What measures must be taken to protect vital installations during exploration? A: Licensee(s) must take necessary precautions and inform local civil administration and the Authority to safeguard vital installations.

Q: Are there any restrictions on disclosing information about the terrain? A: Yes, disclosing information about the terrain to any individual or agency requires clearance from the General Headquarters (MI Directorate) through the Authority.

By The Josh and Mak Team

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