Significant development in Premier Oil's Karachi court case

September 21, 2001

There was a significant development in Premier Oil's long legal battle over the its plans to explore for gas in the Kirthar National Park on Wednesday (19 September) when Pakistan's Attorney-General became involved in the case. The Attorney-General's involvement substantially raises the political stakes of an issue which has hitherto languished in the regional court.

At Wednesday's court hearing, Premier continued to argue that the petition submitted by NGOs (including Friends of the Earth International) should be thrown out. The Sindh High Court initially took the position that this matter was outside its jurisdiction, and that the case would have to be considered instead by the Supreme Court in Islamabad (the highest court of the land). However, Counsel for the petitioning environmental groups successfully argued that the petition was within the jurisdiction of the Sindh High Court.

But the court case will continue to represent a major headache for Premier, since the legal petition calls on the Pakistani Government to cancel the original licence granted to Premier allowing it to explore for gas in Kirthar National Park. And some City commentators have indicated that the controversy will "...inevitably effect [Premier's] share price" [ 3 ].

It is also understood that Premier Oil have beefed up their legal representation in the case by hiring Khalid Anwar, Federal Law Minister in the previous government, who will represent them when the case resumes again next month on October 4th.

Background

Kirthar National Park is one of Pakistan's largest protected areas, stretching over 3,087 square kilometres of rugged mountain desert in the southern province of Sindh. It is home to numerous threatened species such as the unique Sindh ibex (a mountain goat) and the Urial sheep, and to desert wolves, striped hyena, golden jackal, "Chinkara" (a type of gazelle), and no less than eight species of eagle. It is also considered essential for the water supply of the 14 million people in nearby Karachi.

At the start of this year, Kirthar still enjoyed strict protection under Pakistan's wildlife laws. Section 15 of the Sindh Wildlife Protection Ordinance clearly prohibited the "...clearing or breaking up of any land for cultivation, mining or for any other purpose" in the park.

Undeterred, Premier submitted their gas exploration plans, in the form of an Environmental Impact Assessment (or EIA). Local NGOs quickly challenged this EIA in the Karachi courts, but in written evidence submitted to the court, Premier sought to play down environmental fears by citing examples of where the oil and gas industry had, it claimed, operated in "harmonious coexistence" and "perfect harmony" with the environment [ 1 ].

In response, Friends of the Earth International, the world's largest environmental network, submitted a 380-page dossier of evidence to the contrary, including a detailed synopsis of the appalling environmental and human rights abuses associated with the industry in Nigeria.

But, while waiting for the case to be heard, the relevant laws were amended. Under the current military regime in Pakistan, key Government officials can amend legislation without reference to Parliament. In June, the Governor of Sindh province, Mohammed Mian Soomro - a director of an oil company until he became governor last year - amended the relevant wildlife law so that it would not apply:

"...to any activity in a national park in connection with the exploration or production of oil and gas which is undertaken in accordance with an environmental impact assessment". [ 2 ]

Earlier this week, Premier Oil announced that was unloading half of its Pakistani gas interests by establishing a $200 million joint venture with the Kuwait Foreign Petroleum Company (Kufpec). The Kuwati company has essentially taken the place of Shell, who pulled out of the joint venture earlier in the year, following media interest in the Kirthar controversy.

Craig Bennett, Corporates Campaigner for Friends of the Earth said:

"Premier Oil must drop its outrageous plans to explore in Kirthar National Park, and develop a clear policy to avoid such precious areas in the future. If it doesn't, the company will gain an unwelcome reputation for environmental bad-practice and corporate irresponsibility. Furthermore, the UK Government must make British Companies accountable for their actions overseas."

Editor's Notes:

[1] Extracted from the Affidavit filed in the High Court of Sindh, Karachi, Pakistan, by "Premier & Shell Pakistan B.V. Holland through Premier Exploration Pakistan Ltd", Constitutional Petition number 1986/2000.

[2] Extracted from Section 3 of the Sindh Wildlife Protection Second(Amendment) Ordinance 2001.

[3] For example, see "Environmentalists spoil Premier's party", Shares - London, 13/09/01.

For further information contact:

Craig Bennett
Ph: 020 7566 1667
Pgr: 07654 588862

Press Office
Friends of the Earth
Ph: 020 7566 1649
Fax: 020 7490 0881