ISLAMABAD:

The Islamabad High Court (IHC) has directed the Petroleum Division and the Directorate General of Petroleum Concessions (DGPC) to immediately proceed under law against two exploration and production (E&P) companies over unauthorised change in effective control. This violation may lead to the revocation of petroleum rights.

Parliamentary Secretary for Energy (Petroleum Division) Mian Khan Bugti informed the National Assembly on Thursday that the DGPC had launched regulatory proceedings against three E&P companies over alleged violation of petroleum rules. During the question hour, he said the DGPC issued a show-cause notice on July 18, 2025 to Jura Energy Corporation, Frontier Holdings and Spud Energy. In a latest development, the IHC issued a decisive order, directing the Ministry of Energy (Petroleum Division) and the DGPC to take enforcement action against Frontier Holdings and Spud Energy, following allegations of unauthorised transfer of effective corporate control in violation of Pakistan’s petroleum rules.

The court order, issued in response to a writ petition, has effectively removed any room for regulatory delay by instructing the authorities to take the show-cause proceedings to legal conclusion “expeditiously” and strictly in accordance with the law. The matter relates to a transaction executed in early 2025, through which Jura Energy allegedly transferred effective control of its corporate group – comprising Frontier Holdings and Spud Energy – to IDL Investments via an offshore arrangement, without obtaining prior approval from the government of Pakistan.

Under Pakistan’s petroleum regulatory framework, any disposition of share capital or ownership arrangement leading to a change in effective control – whether directly at the operating company level or indirectly through parent companies – requires prior government consent. In this case, such consent was never sought. Following complaints and regulatory correspondence, the DGPC issued a show-cause notice dated July 18, 2025 under Rules 68(d) and 69(d), which empower the government to revoke petroleum rights in cases of non-compliance, including unauthorised changes in ownership or control.

However, despite the notice, the enforcement action reportedly stalled, raising questions over regulatory hesitation in a strategically sensitive sector. This delay forced the matter into litigation, prompting petitioners to seek intervention from the IHC to compel the state to act. During court proceedings, the DGPC submitted a reply that proved central to the case, as it did not dispute the legal breach. Instead, the regulator reaffirmed that petroleum right holders were under a strict statutory and contractual obligation to comply with the Petroleum Exploration & Production Policy 2012 and relevant petroleum rules. The DGPC stated in its submission that any transfer or change in ownership or control could only be undertaken with prior approval of the government, acting through the DGPC, emphasising that the safeguard exists to protect Pakistan’s sovereign, fiscal and regulatory interests. More importantly, the DGPC acknowledged that breach of the mandatory requirement may render the petroleum right liable to action under the rules.