ISLAMABAD: The Petroleum Division has placed JURA Energy’s petroleum rights before the ECC, offering revocation or retrospective regularisation after Law Division confirmed the government’s discretionary power over transfers made without prior consent.
Sources familiar with the matter said the Petroleum Division has prepared a summary titled “Disposition of Controlling Shares of JURA Energy Corporation from Phoenix Exploration Limited to IDL Investments Limited Without Prior Consent of the Government” and placed two options before the ECC.
The case concerns the transfer of all 73.3 percent controlling shares of JURA Energy Corporation by Phoenix Exploration Limited, a Bermuda-based company, to IDL Investments Limited, a British Virgin Islands-based investment entity, without prior government consent.
Spud Energy Pty Limited and Frontier Holdings (Pvt) Limited are working interest owners in several petroleum rights under Petroleum Concession Agreements with the government. The Petroleum Division has treated the transaction at the ultimate parent-company level as resulting in a change of effective control of the petroleum rights holders.
Sources said the Directorate General of Petroleum Concessions had earlier initiated proceedings against the companies over the alleged change in control, after which the matter underwent legal and regulatory scrutiny.
The Petroleum Division subsequently sought the opinion of the Law and Justice Division on the legal position. A meeting was also held between the Minister for Petroleum and the Minister for Law and Justice to seek further clarity regarding the legal opinion.
According to sources, Law Division in its subsequent advice maintained that Rule 68 of the 1986 Rules and Rule 69 of the 2001 Rules provide that the government “may revoke” a petroleum right where the prescribed grounds exist and the required procedure has been followed.
Law Division further explained that the word “may” is enabling in nature and gives discretionary power to the federal government.
Sources said Law Division specifically advised that the decision whether to exercise the revocation power is essentially an administrative and commercial determination for the Petroleum Division, as the concerned authority, after considering all relevant facts, efficacy, financial obligations, contractual obligations and the overall circumstances of the case.
The legal advice, according to sources, does not make revocation automatic merely because the prescribed grounds may exist, but recognises the government’s discretion to exercise the revocation power after assessing the relevant circumstances.
Despite this legal position, the Petroleum Division has not proceeded directly with revocation and has instead placed two alternatives before the ECC.
Under the first option, the government may revoke all petroleum rights held by Spud Energy and Frontier Holdings on the grounds that shares were transferred from Phoenix Exploration Limited to IDL Investments Limited without prior government consent.
Under the second option, the Petroleum Division has proposed that it be authorised to issue a warning to the companies and retrospectively regularise the share transfer.
Sources said the Petroleum Division has also highlighted that the disputed transaction took place at the ultimate parent-company level rather than directly at the parent-company level, while stressing the importance of the existing petroleum rights to the companies’ business.
The ECC will consequently consider the matter in the context of both regulatory enforcement and commercial considerations, with revocation and retrospective regularisation placed before it as separate options.
The decision could have wider implications for the government’s approach to ownership changes and effective control involving companies holding petroleum rights, particularly where transactions occur at the ultimate parent-company level.
