Staff Report
ISLAMABAD:
The Directorate General of Petroleum Concessions (DGPC) of the petroleum division has issued show-cause notices to M/s Spud Energy Pty Limited (SEPL), M/s Frontier Holdings Limited (FHL), and their parent firm M/s Jura Energy Corporation (JEC), over an alleged change in effective control and ownership without prior government approval—potentially violating the Petroleum Rules of 1986 and 2001.
According to official sources, the Petroleum Division flagged serious national security concerns, noting that any change in a company’s ownership or board must receive prior approval. The rationale is to ensure that citizens of countries deemed hostile to Pakistan—such as India or Israel—do not gain indirect control of strategic oil and gas assets operating in the country.
As per the official notice dated July 18, 2025, the DGPC learned that Phoenix Exploration had transferred a 73.3percent controlling stake in JEC to M/s IDL Investments Limited, a company registered in the British Virgin Islands. The transaction took place on March 6, 2025, but was not disclosed to the DGPC either before or after its execution.
The DGPC cited Rule 68(d) of the Pakistan Petroleum (Exploration and Production) Rules, 1986, and Rule 69(d) of the 2001 Rules, which require companies to seek prior government approval for any transfer of shareholding or effective control. The notice emphasized that companies with petroleum rights must report fresh capital issues, ownership changes, and alterations in corporate structure, which did not occur in this case.
The Directorate General of Petroleum Concessions (DGPC) has noted that the transaction under discussion may have involved significant shareholding and structural changes that could impact the effective control of the company. Such changes, under the applicable Petroleum Rules, were required to be formally reported and approved by the DGPC. Specifically, M/s Jura Energy Corporation (JEC) was obligated to seek prior consent from the government before transferring effective control and disposing of its share capital to M/s IDL Investments Limited. However, the transaction between M/s Phoenix and M/s IDL was neither disclosed to the DGPC before nor after its execution.
Notably, this serious lapse came to the attention of the DGPC only after Transparency International Pakistan (TIP) raised the issue through a letter dated 2nd May 2025, thereby bringing the matter to the regulator’s notice. The DGPC emphasized that companies holding petroleum rights are bound by the Petroleum Rules and Petroleum Concession Agreements (PCAs) to operate in line with Good Oil Industry Practices and must obtain all required approvals, licenses, and no-objection certificates (NOCs) from the relevant authorities.
“The transaction under discussion may have undergone shareholding or structural changes impacting effective control and, as such, should have been reported and approved by this Directorate,” the notice read. It also pointed out that companies must operate under Good Oil Industry Practices and obtain all required NOCs, licenses, and approvals under the relevant Petroleum Rules and Petroleum Concession Agreements (PCAs).
The DGPC has demanded a detailed response within 30 days, including documentation justifying why action should not be taken. It has directed SEPL, FHL, and JEC to disclose the shareholding structure of all entities involved—IDL, Phoenix, JEC, PetExPro, FHL, and SEPL—both before and after the transaction. Additional requirements include information on new board appointments, shareholder voting patterns, tax declarations, transaction values, and evidence of any capital gains or withholding tax payments in Pakistan.
The notice further seeks an explanation of how the 2025 transaction differs from a similar 2012 case, when DGPC had granted a No Objection Certificate (NOC) for a change of control in FHL from JEC to Eastern Petroleum Limited, Mauritius.
Failure to respond could result in punitive action, including the revocation of petroleum rights, the DGPC warned. It added that the current notice does not preclude the initiation of other legal actions under applicable rules.
It is pertinent to mention here that the DGPC, through this notice, has also extended the opportunity to M/s Spud Energy Pty Limited (SEPL), M/s Frontier Holdings Limited (FHL), and their parent company M/s Jura Energy Corporation (JEC) to appear before the authority for a personal hearing, should they choose to exercise this option. This allows the companies a formal platform to present their position and provide any clarifications regarding the alleged unauthorized change of control.
