Pakistan has discovered significant new oil and gas deposits in the northern part of the country, specifically in the Attock District of Punjab. This discovery is expected to slightly reduce the country’s heavy energy imports and help conserve precious foreign exchange reserves.
According to a notification, Pakistan Oilfields Limited (POL) reported on Monday that it has encountered 714 barrels of crude oil per day and 10.2 million cubic feet per day (mmcfd) of gas from the Jhandial-03 well located in the Ikhlas Block in Attock District. This new discovery accounts for about 1% of the country’s total oil production and 0.3% of its gas output from domestic hydrocarbon fields. The latest weekly production data suggests that crude oil production stood at 68,248 barrels per day for the week ending June 23, 2024, while gas production was at 3,146 mmcfd.
The oil and gas exploration and production company has provided four different production estimates for hydrocarbons at various choke sizes from the Jhandial-03 well. It noted a crude oil flow range of 701-767 barrels per day and gas flow range of 7.4-10.2 mmcfd. “The well is expected to be connected to the production line within three weeks,” the POL notification stated.
POL is the operator of the Ikhlas Block with an 80% working interest, while the Attock Oil Company (AOC) holds a 20% interest. The company began drilling the Jhandial-03 well in October 2023, reaching a depth of 17,778 feet in the Lockhart Formation. In a brief comment, Topline Research estimated the impact of the new hydrocarbon discovery on POL’s annual earnings at around Rs10 per share or 7% for FY25. POL’s share price surged 4.30%, or Rs22.31, amid the new discovery, closing at Rs540.70 per share at PSX on Monday.
In its latest financial report for the nine-month period ending March 31, 2024, POL reported a 5% drop in crude oil production to 1.33 million barrels compared to 1.40 million barrels in the same period of the previous year. This translates to 4,855 barrels per day for the nine-month period of FY24. Similarly, gas output decreased almost 2% to 17,576 million cubic feet compared to 17,901 mmcf in the same period of the previous year, translating to 63.91 million cubic feet per day for the period under review.
The company described the latest hydrocarbon discovery as a “significant quantity” in the PSX notification. However, in terms of domestic requirements, it remains moderate.
Energy experts estimate that Pakistan meets almost 70% of its total energy requirements through expensive imports, while local production caters to only 30% of national needs. This can be gauged from the fact that energy accounted for over one-fourth ($15.34 billion) of the total $49.85 billion in imports for the first 11 months of the previous fiscal year, according to PBS. The government has recently approved a policy for tight oil and gas discoveries, awarding a 40% higher tariff on these hydrocarbons compared to conventional ones. This policy is expected to boost local production and significantly reduce imports.
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