Oil field lease period extended to 30 years: new petroleum policy announced

The government of Pakistan will give a 10% deemed duty to the oil refineries, placing an upper cap of US$80 and a lower cap of US$50 per barrel of crude oil. The deemed duty is based on arevised formula to upgrade the country’s petroleum products and allow them to meet international standards. According to the government, the new policy is intended to encourage the energy sector to meet demand in the country, encouraging direct foreign investment. However, the Ministry on Petroleum warned that the government would give deemed duty to those oil refineries that would enter into an engineering, procurement and construction (EPC) agreement with the government to upgrade the products in scheduled time. Refineries will not be given the deemed duty without committing to spend it on the upgrade of their products, the ministry said. As of late February, there were 100 licenses undergoing the approval process for drilling in Pakistan. (April 3, 2009)