Federal Minister for Petroleum Ali Pervaiz Malik has emphasised that indigenisation of the energy sector is the way forward and Pakistan's exploration and production (E&P) companies are working diligently to achieve this national goal.
He held a meeting on Monday with the managing director and senior executives of Oil and Gas Development Company (OGDC) at the hydrocarbon explorer's head office. The meeting focused on a comprehensive briefing by the OGDC management on the company's operational activities and the strategic production optimisation drive aimed at reducing the decline in its mature hydrocarbon fields.
"I assure my complete and full support for the structural reforms necessary to ensure the sustainability of the petroleum sector," said the federal minister. "The government will provide all possible facilitation to enable E&P companies to operate at their maximum potential and attract the investment needed for growth."
He was apprised of the various initiatives undertaken to enhance recovery and maintain production levels. The minister stressed that boosting the company's operational and financial performance was intrinsically linked to improved governance across the sector.
He expressed his full support for reforms in the petroleum sector, stating they were essential for long-term sustainability and contribution to the national economy.
In a significant update, the minister was informed that during fiscal year 2024-25, OGDC made five new oil and gas discoveries, a testament of Pakistan's immense potential in hydrocarbon reserves.
OGDC Managing Director Ahmed Hayat Lak praised the minister for his support, saying: "It is a welcome step that there is seriousness about reforms in the sector. This commitment from the government provides a clear direction and will enable E&P companies like OGDC to play a more effective role in achieving national energy self-sufficiency."
The meeting concluded with a mutual resolve to continue close collaboration between the Ministry of Petroleum and OGDC to overcome challenges and capitalise on opportunities within the energy sector.
Last week, OGDC hosted a conference call following the release of FY25 results. The company announced the highest-ever dividend, declaring Rs5 per share for the fourth quarter and Rs15.05/share for the full year.
The management noted that gas curtailment by Sui Northern Gas Pipelines Limited (SNGPL), driven by excess re-gasified liquefied natural gas (RLNG), resulted in an estimated revenue loss of Rs40-43 billion during FY25, according to a report of Topline Research.
"Had this been not the case, the earnings would have been higher, with hydrocarbon production estimated at 32,709 barrels of oil per day (bpd) and 743 million cubic feet of gas per day (mmcfd), compared to actual volumes of 30,919 bpd and 652 mmcfd," the management said.
It expects the receipt of cash flow from Uch under the power-sector circular debt resolution. Regarding the gas-sector circular debt, the government was taking the issue seriously and a roadmap could be expected this year.
Also last week, according to Topline, OGDC reported a 15% quarter-on-quarter (QoQ) decline in earnings to Rs9.37 per share in 4QFY25, taking FY25 earnings to Rs39.5 per share, down 19% year-on-year (YoY). "Earnings are higher than our expectations, primarily due to lower exploration costs and a lower effective tax rate, which stood at Rs4.1 billion and 28% respectively in 4QFY25."
Exploration costs in 4QFY25 went down 40% QoQ to Rs4 billion, while for FY25, exploration costs came in at Rs18.7 billion on account of three dry wells – Kandewaro-1, Tay Ne-1 and Chak 202 – besides the ongoing seismic activities in several areas such as Uch development and production lease, Murradi and Sehwan.
The decline in royalty expense of 46% YoY in 4QFY25 was primarily due to the fall in net sales. Royalty charges stood at 8% of net sales during the quarter, down from 13% in 9MFY25, reverting to the normalised rate of 12% for the full year (FY24: 12%). Operating expenditures were reported at Rs35.2 billion in 4QFY25, down 3% YoY. "In our view, this YoY decline is a result of the fall in sales volumes amid RLNG curtailment," Topline said.
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