Significant gas reserves discovered in North Waziristan

Pakistan has discovered significant gas deposits estimated at 351.2 billion cubic feet (BCF) in the Shewa fields of North Waziristan, with an anticipated lifespan of 17 years. The country is poised to inject 70 million cubic feet per day (mmcfd) from the Shewa-2 well into the national grid, boosting domestic gas production by over 3% daily. This increase will reduce the need for expensive fuel imports and conserve hundreds of thousands of US dollars in foreign exchange reserves.

According to Mari Petroleum's Annual Report 2024, released on Tuesday, the exploration and production company is set to connect 70mmcfd of gas from Shewa-2 into the system through a pipeline recently built by Sui Northern Gas Pipeline Limited (SNGPL). Topline Research analyst Sunny Kumar noted that hydrotesting of the pipeline is underway.

The project had faced delays due to security concerns, but the pipeline was completed in August 2024. The injection of gas into the grid will commence after the commissioning of the Early Production Facilities (EPF) and subsequent ramp-up. Mari Petroleum's report stated that this move will increase indigenous gas supply by over 3%, enhancing production capacity and diversifying the company's production portfolio, resulting in substantial revenue generation.

Kumar highlighted that Shewa's gas reserves, as of June 2024, are estimated at 351.2 BCF, with a production lifespan of approximately 14 years at the rate of 70mmcfd. Following this development, Mari Petroleum's share price surged by 1.93%, closing at Rs3,510.73 per share with a trading volume of 125,759 shares on the Pakistan Stock Exchange (PSX). Mari Petroleum operates the Waziristan Block with a 55% working interest, while the Oil and Gas Development Company (OGDC) and Orient Petroleum Inc (OPI) hold 35% and 10% interests, respectively, explained Kumar. The annualised impact on Mari Petroleum is expected to be Rs60-65 per share (11-12% of annual earnings for FY25), while OGDC's share will see an impact of Rs1.2, based on oil and gas price assumptions of $80 per barrel and $5.9-6.0 per mmbtu (million British thermal units).

Several appraisal and exploration wells are planned in the Waziristan Block to optimise its hydrocarbon potential. Among these, the Spinwam-1 exploratory well was spudded on May 28, 2024, with drilling expected to be completed by the third quarter of FY2024-25.

Recent data shows that Pakistan's crude oil and gas reserves have experienced a turnaround, with crude oil reserves increasing by 26% and gas reserves by 2% as of June 30, 2024. This has reversed a long-standing trend of depletion, extending the lifespan of the country's oil and gas reserves to 10 and 17 years, respectively.

Mari Petroleum and OGDC have played crucial roles in this growth, with Mari's oil reserves doubling since December 2023, alongside healthy growth in gas reserves. Amendments to the 2012 Petroleum Policy and the introduction of a new Tight Gas Policy are expected to further incentivise exploration and development, enhancing operational efficiency and resource recovery.

As Pakistan continues to tackle the challenges of energy production and reserves management, these developments offer a cautiously optimistic outlook for the energy sector, particularly for industry leaders like OGDC and Mari Petroleum, said the report.