Monitoring Desk
ISLAMABAD: The Prime Minister’s Office has directed the Petroleum Division to submit a detailed report on alleged violations of the Pakistan Petroleum Rules, 2001, by two oil and gas exploration firms—Frontier Holdings Limited (FHL) and SPUD Energy Pty Limited—in connection with the alleged unauthorized transfer of controlling shares.
According to official documents, the PM Office, in a letter dated May 5, 2025, titled “Urgent Action Required: Violation of Petroleum Rules by Frontier Holdings Limited (FHL) and SPUD Energy PTY Limited”, took serious notice of potential breaches of regulatory provisions and instructed the Petroleum Division to investigate the matter thoroughly and furnish a detailed report.
The move comes after a formal request by Transparency International Pakistan (TIP), which on May 2, 2025, urged the Prime Minister’s Office to investigate the alleged disposition of controlling shares of FHL and SPUD without prior government approval—a potential violation of Rule 69(d) of the Pakistan Petroleum (Exploration and Production) Rules, 2001.
Rule 69(d) stipulates: “Without the prior consent of the Government, there shall be no disposition of the share capital of the holder or its parent company in consequence of which any person who, prior to that disposition, had effective control of the holder or its parent company ceases to have such effective control.”
TIP claimed that SPUD and FHL are affiliated with Jura Energy Corporation, which recently underwent a shift in controlling ownership from Phoenix Holdings Ltd to IDL Investments Ltd. TIP alleged this transaction occurred without the knowledge or consent of the Petroleum Division, in violation of the applicable rules.
In response to the PM Office directive, the Director General Petroleum Concessions (DGPC) moved swiftly and directed the Chief Executive Officer of FHL to submit a comprehensive report, as a prerequisite to proceeding further in accordance with the governing petroleum regulations.
TIP further highlighted a concerning history of regulatory non-compliance by the two companies, citing an outstanding government-ordered recovery of Rs1.3 billion in unpaid royalties. The organization warned that failure to enforce compliance in the current matter could set a dangerous precedent, erode regulatory authority, and threaten Pakistan’s energy sovereignty.
Records show that in January 2023, Prime Minister Shehbaz Sharif had already directed the Petroleum Division to recover Rs1.13 billion in unpaid royalties from SPUD Energy and FHL. In a letter dated January 20, 2023, the PM Office instructed the Secretary of Petroleum Division to ensure recovery within two weeks and to submit a compliance report.
Following this directive, Fazal Abbas, a financial analyst at the Petroleum Division, advised the Managing Director of Sui Southern Gas Company Limited (SSGC), Fazal Abbas, to halt any payments to SPUD Energy and FHL until the outstanding royalties—accrued at a rate of 12.5% on natural gas and crude oil sales from the Reti Maru, Badin IV South Block, and Zarghun fields—were deposited in the government treasury.
In their defense, both SPUD Energy and FHL have reportedly strongly rejected the allegations, denying any breach of legal or regulatory obligations. They clarified that no change in their direct ownership or control had occurred. According to their official response, IDL became the majority shareholder of Jura Energy Corporation on March 6, 2025. However, since the transaction occurred at a level above their immediate parent companies, they argued that prior government consent was not legally required.
Specifically, FHL contended that Rule 69(d) applies only to changes in its own shareholding or that of its direct parent company—not to entities higher up in the corporate structure. Similarly, SPUD Energy, which is governed under the 1986 Petroleum Rules, cited Rule 68(d), which they claimed mirrors the same interpretation.
The companies asserted that the share transaction involving Jura Energy Corporation did not amount to a direct change in control of either FHL or SPUD Energy and therefore did not trigger the consent requirement. They also noted that the transaction was fully transparent and had been disclosed through official stock exchange filings in Canada, where Jura is listed.
Calling TIP’s allegations “baseless and misleading,” the companies maintained that all actions were in full compliance with applicable laws and that there was no attempt to conceal the shareholding changes.
