Oil, gas firms await incentives for output boost

Have potential to raise production from existing fields by embracing modern technology

Zafar Bhutta April 13, 2024


Oil and gas exploration companies have called on the new government to formulate a policy that will offer incentives for optimising hydrocarbon production from the existing fields to ensure the country’s energy security.

Sources told The Express Tribune that several oil and gas exploration companies had the potential to install advanced technology at their existing fields in an effort to boost production to overcome energy shortfall in Pakistan.

These exploration companies are producing oil and gas under the old petroleum policies that offer low prices. Now, they require additional money to spend on incremental production from these fields.

Earlier, the caretaker government approved amendments to the petroleum policy to allow exploration companies to sell 35% of the extracted oil and gas to third parties.

Additionally, it approved a new tight gas policy and offered incentives for the exploration of tight gas deposits to add to the depleting reserves in the country.

After approval of the policy, the country’s largest state-owned hydrocarbon explorer, Oil and Gas Development Company Limited (OGDCL), embarked on plans to drill up to 80 wells for the exploitation of tight gas.

OGDCL has taken the lead by installing new technology and started working on different wells to boost hydrocarbon production without any additional incentives. Its management is pressing ahead with a pilot project of incremental production on its own risk.

However, other oil and gas exploration companies were reluctant to start work on incremental production from the existing fields due to the lack of price incentives.

Industry officials point out that the government is spending a huge amount of dollars on liquefied natural gas (LNG) imports, which is much more expensive than the indigenous gas.

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They complain that local oil and gas exploration companies are being ignored while the country is relying more on LNG imports to overcome gas crisis.

However, OGDCL has targeted to ramp up crude oil production to 50,000 barrels per day (bpd) to meet more consumer demand, which will help curtail imports as the country is facing a dearth of US dollars.

Soon after assuming charge as the OGDCL managing director, Ahmed Hayat Lak formed a working group on production optimisation to increase energy output by optimally utilising modern technologies.

A dedicated group within the company is intensifying efforts to boost oil and gas output through technological interventions and is focusing on the existing wells and fields. The company aims to raise crude oil output from 32,000 bpd to 50,000 bpd over a five-year period, with incremental production each year.

According to the programme, some 2,000 bpd will be added to the total output in financial year 2023-24, 9,379 bpd in 2024-25, 12,104 bpd in 2025-26, 16,286 bpd in 2026-27 and 19,583 bpd in 2027-28.

Any increase in domestic crude oil production will be seen as a relief for the country’s fragile economic situation. OGDCL is leveraging state-of-the-art technology, including electrical submersible pumps. Moreover, it is promoting indigenisation to lessen reliance on imports, engaging local manufacturers and slashing imports by 25%.

Notable successes include a significant enhancement in production at Siab-1 well and improved performance at Nim East-1 exploratory well. Rig-less interventions and new perforations have led to substantial increases in oil, gas and liquefied petroleum gas (LPG) production at various wells, showcasing the company’s commitment to optimisation and efficiency.

These achievements underscore the proactive approach to addressing Pakistan’s energy needs while mitigating dependence on imports. By harnessing technology and fostering local industry participation, OGDCL says it is paving the way for sustainable growth in the oil and gas sector, contributing to the nation’s economic resilience and energy security.

Published in The Express Tribune, April 13th, 2024.

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