AROL had a non-operating 10% working interests in Gambat South, Naushehro Feroz and Kotri North exploration blocks in Pakistan. PHOTO: FILE
As Canadian-based firm Asia Resources Oil Limited (AROL) decides to divest interest in all its assets in Pakistan, Pakistan Petroleum Limited (PPL) has decided to acquire shares in three of its fields with potential reserves of tight and shale gas.
Several foreign firms have sold their assets in Pakistan due to poor law and order situation, low incentives and bureaucratic hurdles. AROL will add to the growing list.
The government is heading to form a subsidiary of PPL to acquire AROL’s assets. The three blocks are identified by PPL as ideally located in the unconventional exploration fairway of the Middle Indus Basin for tight and shale gas. PPL is spearheading the unconventional exploration initiative in the country, acquiring these blocks of strategic value to kickstart the exploration programme.
Sources said that the petroleum ministry had moved a summary to the Economic Coordination Committee (ECC), seeking approval for forming the subsidiary and acquiring AROL assets in Pakistan.
AROL, a British Virgin Islands (BVI) registered company with an office in Calgary and non-operating 10% working interests in Gambat South, Naushehro Feroz and Kotri North exploration blocks in Pakistan, is divesting its interest in all its assets. PPL, being the operator and a majority interest holder in the three exploration blocks, has an agreement with AROL on right of first refusal upon divestment of AROL’s working interests in the blocks. This means that in the event of AROL selling its stake, PPL will have to be offered the sale before the open market.
In Gambat South Block, PPL recently made two successive hydrocarbon discoveries and plans to drill further exploratory and appraisal wells. In Naushehro Feroz Block, drilling of an exploratory well is currently in progress. Furthermore, drillable prospects have been identified and land acquisition for drilling site is in progress in Kotri North Block.
Petroleum ministry had informed the economic decision-making body that the proposed acquisition by PPL would protect the three assets from being sold by AROL to small entities thereby creating hindrances for PPL in the fast-paced exploration required in these blocks. Moreover, through this acquisition, it would become relatively easier for PPL to raise foreign currency project financing for partly meeting the Gambat South field development costs.
The ECC has been informed that it is therefore of strategic national importance for PPL to acquire the 10% working interest and restructure it to source unconventional exploration technology through it from Canada.
For the corporate acquisition of AROL and three target assets through PPL’s wholly-owned subsidiary, an investment will be required to meet the immediate acquisition cost and for the subsequent exploration and appraisal plan costs for the Gambat South discovery. This amount will be injected by PPL in the form of equity contribution to PPL’s wholly-owned subsidiary.
The acquisition will contribute significantly to the long-term energy security of the country by enabling technology transfer in exploring unconventional hydrocarbon reserves (shale and tight gas).
The petroleum ministry has sought the ECC’s approval for equity investment by PPL. It had also sought approval of external debt financing in foreign currency which may be wholly or partly secured through PPL’s assets in Pakistan.
Published in The Express Tribune, March 11th, 2014.
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@ibrahim chill not every indian is like that. Plus Pakistanis comment on Indian newspaper too..no big deal.. Ignore the trolls @hindu @uniassailum they represent ten percent of india who are supportive of right wing politics. 90pcnt secular they don't view problems through prism of religion or simple hatred but rationality.
@genesis while China is good friend it's not wise to put all eggs in one basket, investment and risk wise it will make you totally dependent and give control to them...diversifing business with other countries will help pakistan in long run...if something goes wrong with one ...your economy will still stay afloat. but that can't be done unless, you improve your law and order situation. @adeeb how is it good development if mncs and foriegn investment leave pakistan in long run? You need foriegn investment in your country to boost economy.
China should be invited as a good friend and the fields handed over to them to develop and of course all this only if they agree and are willing to take the RISK
Things must be in true perspective. AROL was run by a veteran oil man of Pakistan origin based in Canada. He had several successful business ventures like this in the past and this time it was no different. He had Malaysian investors on his back. They made money after PPL made discovery in Gambat South block. It was probably in better interest of PPL to buy AROL which they have done. I am sure this transaction has nothing do to with Pakistan’s resources. In fact, this JV made successful back to back gas discoveries.
Why do we always get random indians making hate comments here? Do they not have anything better to do than to comment on every article?
Appears the Bhatta Group has also approached the company. Bhatta & Commission carries the same meaning ........!!
@Lunacyassailam: Hence the Scythian occupied Indus will not even produce a blade of grass.Let alone oil
Why Pakistan will never produce anything till the end of the 4th age of Kali Yuga?because it was already written in Hindu texts much before the birth of Abrahamic religions, that :
Sudras(Lower Classes), fallen Brahmanas and members of the higher castes who have given up the Vedic courses of conduct and Mlecchas(Barbarians) will rule over the banks of the Indus and Chandrabhaga(Chenab) rivers, the city of Kaunti and the territory of Kashmira. - Srimad Bhagavatam.
@Objective Observer: If you would have read the article properly, it said that PPL is already the operator and holder of a major working interest in the three assets. So a Pakistani company already has the capability to produce its own resources. Our natural tendency is to whine for no good reason. We whine when foreign companies come here to extract our resources and then again whine when they leave. Can't be happy under any circumstances.
For a decade I have said Pakistan will share Afghanistans fate. Now Pakistan can't produceits resources either.
Sorry, there aint noo oil here - bye bye. Pakistani Muslims are not builders, they are destroyers.Hence the Scythian occupied Indus will not even produce a blade of grass.Let alone oil.