A landmark transaction has quietly reshaped Pakistan's natural gas landscape. Mari Energies awarded a contract to supply up to 17.5 million cubic feet per day (mmcfd) of gas from its Spinwam discovery in Waziristan to Universal Gas Distribution Company Ltd (UGDCL), marking the first private sale under the Petroleum Policy 2012. The deal, announced in a notice to the Pakistan Stock Exchange, breaks a decades-long public monopoly in the sector. Main Developments Mari Energies issued a 'Letter of Award' to UGDCL after a bidding process that began on May 15. The company confirmed the successful conclusion of the bidding, with UGDCL emerging as the winning bidder for the gas from the Waziristan Block in Khyber Pakhtunkhwa. The award follows a framework that allows gas producers to sell 35 percent of new finds to private entities. This policy stems from decisions made by the Council of Common Interests (CCI) and the Economic Coordination Committee (ECC) last year. Read also: Pakistan Cement Sales Jump 17% in July Despite Export Drop UGDCL now becomes the largest private entity in natural gas sales, a sector historically dominated by state-owned Sui Northern and Sui Southern gas companies. The company already sells over 40 mmcfd to private customers, mostly industrial, and with this addition, its portfolio will total roughly 60 mmcfd. Mari Energies operates the Waziristan Block with a 55 percent working interest. Its partners include Oil and Gas Development Company Limited (35 percent) and Orient Petroleum Inc. (10 percent). Background SNGPL and SSGCL held a legal monopoly over gas sales and distribution for decades, which formally ended in 2010. However, an enabling regulatory environment failed to materialize, effectively preserving their exclusive rights until last year. In January 2024, the CCI directed gas companies and the petroleum division to prepare a framework for selling 35 percent of unallocated gas to third parties. The Executive Committee of the National Economic Council (Ecnec), led by Deputy Prime Minister Ishaq Dar, approved the plan in January 2025. The bidding attracted interest from about four dozen firms, including non-licensed entities. The bid started at the 2012 policy rate of $6.86 plus a minimum of $1 per mmBtu, and was settled at a premium. Why It Matters Delivered gas prices may range between $10 and $10.5 per mmBtu after transportation charges, reflecting market dynamics rather than state-set tariffs. This transaction eases liquidity challenges for exploration and production companies. The policy aims to attract $4-5 billion in fresh investment for offshore exploration, a critical need for Pakistan's energy security. While Ogra has granted over a dozen licenses to private firms, UGDCL is the first to practically execute sales and purchase agreements with producers, consumers, and transporters. What's Next Mari and UGDCL must now obtain regulatory approvals as outlined in the 'Framework for Sale of Gas to Third Parties,' notified on January 7, 2025. Successful completion of these steps could pave the way for similar deals involving other licensed private entities. The premium achieved in this bidding may set a benchmark for future auctions. Whether other producers follow suit depends on regulatory smoothness and the framework's ability to sustain investor confidence.