ISLAMABAD: The upstream oil and gas exploration and production companies have lodged a strong protest against the state-owned Sui Southern Gas Company Ltd and Sui Northern Gas Pipeline Ltd for defaulting on more than Rs1.5 trillion in overdue payments.

Pakistan Petroleum Exploration and Production Companies Association (PPEPCA), in a letter to the Petroleum Division, said that more than Rs1.5tr was pending against SNGPL and SSGC.

The dues of exploration companies stood at Rs224 billion in June 2015, which piled up to Rs1.5tr by September 2025, excluding late payment surcharges.

“It is deeply concerning that no material improvement has been observed in the outstanding receivables during the fiscal year 2024-25, despite four consecutive consumer gas price increases notified on Nov 1, 2023, Feb 1, 2024, July 1, 2024, and Jan 1, 2025,” PPEPCA has said.

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The association said that in recent times, this sector has been producing 2.68 billion cubic feet daily (BCFD), meeting over 30 per cent of the country’s primary energy needs. However, the sector is witnessing a downward trend, driven primarily by the persistent defaults of state-owned gas utility companies in settling overdue payments to E&P companies.

This deterioration not only threatens energy security but also undermines investor confidence, further weakening the overall investment climate in the country, it said.

The letter added that, as a result, the country’s gas production has declined significantly from its peak of 4 BCF per day.

PPEPCA said that SNGPL was to pay Rs718bn, whereas SSGCL was to pay Rs730bn to oil and gas exploration companies.

It added that the balance provided does not reflect the total receivables of upstream companies, as some companies have not provided the required data.

The E&P companies affected by the huge overdue debt include Al Haj, GHPL, Kufpec, Mari, OGDCL, OPI, POGC, POL, PPL, Prime and UEP. It added that the receivables have accumulated over 10 years, and PPEPCA also expressed concerns that several E&P companies exited Pakistan during this period.

PPEPCA has referred to the terms and conditions in Petroleum Concession Agreements and Gas Sale Agreements, clearly stating that gas buyers must make payment within 30 days of receiving the invoice.

The critical cash flow crisis has led to the scaling back of exploration and development activities, resulting in a continuous decline in indigenous gas supplies.