New oil and gas deposits discovered

In a significant development for Pakistan’s energy sector, notable new oil and gas deposits have been discovered from a well jointly operated by the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Pakistan Oilfields Limited (POL) in the Kohat district of Khyber-Pakhtunkhwa (K-P). Additionally, Pakistan Petroleum Limited has revamped gas compressors installed in one of the country’s largest domestic gas fields, Sui, to enhance fuel output from aging wells.

The discovery of new deposits and the measures taken to boost production from older fields are expected to significantly improve Pakistan’s energy security. This development will help reduce the country's heavy reliance on expensive energy imports and conserve precious foreign exchange reserves.

In separate notifications to the Pakistan Stock Exchange (PSX) on Tuesday, OGDCL, PPL, and POL reported successfully testing around 16.4 million standard cubic feet per day (mmscfd) of gas and 159 barrels per day of condensate (crude oil) from the Kawagarh-1 formation in the Razgir-1 exploration well, which was drilled on January 9, 2024.

The TAL joint venture, which includes OGDCL with a 30% working interest, MOL Pakistan Oil and Gas Co BV (the operator) with a 10% stake, PPL with 30%, POL with 25%, and Government Holdings Private Limited (GHPL) with a 5% working interest, made the discovery. OGDCL’s notification indicated that this new find has de-risked further exploration play in the TAL block, leading to new upside opportunities and enhancing the country’s indigenous hydrocarbon supply and reserves base.

POL’s notification added that the tested hydrocarbons, measuring 16.40 mmscfd of gas and 159 barrels per day of condensate, were recorded before any acid stimulation job. Testing operations are ongoing to ascertain the well’s true potential, and actual production figures may differ significantly from these initial test results.

PPL’s notification stated that the new discovery would contribute significantly to improving the country’s energy security by utilising indigenous resources. In another notification, PPL reported that it has identified and executed a production enhancement opportunity in the Sui Gas field through the revamping of SML compressors, resulting in a production increase. This initiative, which addressed the declining wellhead pressure due to field aging, led to a production gain of 19 mmscfd of gas.

The project, initiated in March 2023 and completed in June 2024, involved successfully revamping all seven SML compressors to operate at a lower inlet pressure, thus sustaining production from the Sui Gas field. This additional and cost-effective indigenous hydrocarbon production is expected to help bridge the energy demand and supply gap, saving significant foreign exchange for the country.

The announcements positively impacted the share prices of the listed oil and gas exploration firms, leading to notable turnover at the Pakistan Stock Exchange (PSX) on Tuesday.

Earlier, in mid-July 2024, Pakistan Oilfields Limited (POL) reported discovering 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 the 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.

Weekly production data indicates 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. POL described this hydrocarbon discovery as a “significant quantity” in a PSX notification, though it remains moderate in terms of domestic requirements.

Energy experts estimate that Pakistan meets nearly 70% of its total energy requirements through expensive imports, while local production caters to only 30% of national needs. Energy imports 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 the Pakistan Bureau of Statistics (PBS).

The government recently approved a policy for tight oil and gas discoveries, offering a 40% higher tariff on these hydrocarbons compared to conventional ones. This policy is expected to boost local production and significantly reduce the need for imports.