Oil and gas exploration deals inked

Energy firms will make minimum investment of $65m in first three years

ISLAMABAD:

The government on Monday entered into petroleum concession agreements and awarded exploration licences to energy firms that would make a minimum investment of $65 million in the first three years of exploration activities to tap new oil and gas reserves.

The move comes at a time when the country is facing oil and gas scarcity due to the Russia-Ukraine war.

Pakistan is encountering a crisis-like situation with rising demand for liquefied natural gas (LNG) and petroleum products, especially diesel. It is heavily dependent on LNG and oil imports to meet domestic needs.

In a statement, the Petroleum Division said that the government of Pakistan had struck petroleum concession agreements and granted exploration licences for Block 2,966-2 (Chah Bali).

This field is a joint venture between Oil and Gas Development Company Limited (OGDCL), which has a 70% stake as an operator, and Pakistan Oilfields Limited (POL), having 30% shareholding.

The government also entered into agreements for Block 2,967-5 (Machh) and Block 2,867-6 (Dadhar) with a joint venture of Mari Petroleum Company Limited (MPCL), the operator with 40% stake, Pakistan Petroleum Limited (PPL), 30% shareholding, and United Energy Pakistan Limited (UEPL), 30% shares.

Other hydrocarbon exploration blocks included Block 2,866-5 (Kalat West) and Block 2,869-15 (Sui North), operated by the joint venture of PPL (operator – 50%) and MPCL (50%), and Block 2,969-11 (Meeranpur), run by the joint venture of UEPL (operator – 50%) and MPCL (50%).

Efforts to find additional oil and gas deposits in these blocks will bear fruit in the next few years and these will not only lead to enhanced investment in the petroleum sector but will also contribute to bridging the energy demand and supply gap.

Exploration blocks Chah Bali, Machh, Dadhar and Kalat West are located in Balochistan whereas Sui North and Meeranpur blocks are situated in Balochistan and Punjab.

Total area of these blocks is calculated at 9,901 square kilometres. A minimum investment of $65 million will be made by companies for oil and gas find over a period of three years.

They are also required to spend a minimum of $30,000 per year on social welfare schemes in each block.

OGDC is a public limited company engaged in exploration and production (E&P) activities for the last five decades. It holds the largest share in the total reserves of oil at 33% and gas at 34%. Its share in total oil and gas production is 47% and 29% respectively.

PPL, the pioneer of natural gas industry, has been a frontline player in the energy sector since the mid-1950s. As a major supplier of gas, PPL contributes over 19% to the country’s natural gas supplies besides producing crude oil, natural gas liquids (NGL) and liquefied petroleum gas (LPG).

Mari Petroleum is one of the leading integrated E&P companies, with net hydrocarbon production of 104,856 barrels of oil equivalent per day. With a 23% market share, it is the second largest gas producer in Pakistan and has a strong reserve base of around 600 million barrels of oil equivalent.

Published in The Express Tribune, November 29^th, 2022.

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