The federal government has delegated powers to the Petroleum Division for the approval of development plan for exploration licences aimed at expediting the approval process and ensuring long-term energy security by boosting oil and gas production activities.
Earlier, the Economic Coordination Committee (ECC) of the cabinet was approving the Declaration of Commerciality (DoC) and Field Development Plan (FDP) for the holders of exploration licences.
Now, the ECC has allowed the Petroleum Division to approve the DoC and FDP to expedite processing.
Sources told The Express Tribune that the Petroleum Division sought amendments to rules, which the Cabinet Committee on Energy approved.
During an ECC meeting held on March 30, it was requested that in order to expedite the approval process with the objective of enhancing oil and gas production, the Petroleum Division may also be authorised to approve the request of DoC/FDP for exploration licences granted under the Pakistan Petroleum (Exploration and Production) Rules 1986.
The division shared concerns that Pakistan was facing challenges in meeting the ever-growing energy needs due to its expanding population, natural depletion of major oil and gas fields, rise in demand, dearth of new big discoveries and economic growth.
It was added that increasing the exploration and development activities was essential to overcome the challenges. The petroleum ministry stated that expeditious exploration and production (E&P) activities were critical for the growth of Pakistan’s oil and gas industry and long-term energy security.
Accelerated exploration and augmented development work were extremely essential in order to reverse the decline in crude oil and gas production, increase hydrocarbon output and reduce reliance on imported energy, which left an adverse impact on balance of payments and trade, it added. ECC was informed that the Petroleum Division was taking various measures and one such step pertained to the approval of DoC and FDP on a fast-track basis where various exploration and development activities were underway.
The approval is granted to ensure the smooth running of development operations and enable the petroleum rights holders to make efforts for exploring the hydrocarbon deposits.
Petroleum Division pointed out that it had received an application from Mari Petroleum Company Limited (MPCL) for approval of the DoC and FDP for Hilal and Iqbal discoveries in accordance with Rule 24, read with Rule 33(1) of Pakistan Petroleum (Exploration and Production) Rules 1986.
Based on the volumetric estimates, initial performance, forecast and economic evaluation, both Hilal and Iqbal discoveries had been declared as commercial. According to MPCL’s estimates, the two discoveries have reserves of 21.03 billion cubic feet (bcf) of gas.
Petroleum Division told the ECC that the case had been reviewed thoroughly taking into consideration the estimated reserves and economic evaluation of the fields.
It requested the committee to approve the DoC and FDP for Iqbal-1 with effect from May 9, 2022 and Hilal-1 effective from April 15, 2022.
ECC considered a summary submitted by the Petroleum Division titled “Declaration of Commerciality, Approval of Field Development Plan over Hilal and Iqbal Discoveries” and gave its approval.
In its meeting, the cabinet committee also reviewed the request for extended well testing at Ghazij-1 discovery.
Petroleum Division informed the ECC that a development and production lease was granted for Mari discovery to MPCL (then Mari Gas) under the Pakistan Petroleum (Exploration and Production) Rules 1986.
Currently, Mari field is producing 752 million standard cubic feet of gas per day (mmscfd) and 101 barrels of condensate per day. The lease will remain valid till November 10, 2024. The company has so far acquired 1,077 square km of 3D seismic data. Based on results of the data, MPCL has made a new gas discovery in Mari lease by drilling a well namely Ghazij-1.
Petroleum Division received a request from MPCL for extended well testing to appraise the discovery in Ghazij-1 exploration well drilled under the Mari development and production lease.
Extended well testing is a technical requirement and common industrial practice to assess the oil and gas discovery to establish the extent of reserves and evaluate the reservoir’s performance for the declaration of commerciality. “The request of the company for extended well testing is rational and in line with the applicable petroleum policy and rules,” the Petroleum Division said.
It proposed a one-year extended well testing with effect from the start of production (expected date of production was the fourth week of February 2023), subject to the condition that MPCL would submit the DoC and FDP before expiry of the extended well testing period.
The production taken under the test production arrangement would be accounted for in the payment of production bonus. The company shall fulfill all other statutory obligations like rentals, training and social welfare as per applicable rules. ECC considered a summary submitted by the Petroleum Division titled “Request for Extended Well Testing over Ghazij-1 Discovery” and granted its approval.
Published in The Express Tribune, April 7th, 2023.
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