“The Ministry of Petroleum and Natural Resources has written a letter to the Cabinet Division, saying PPL board of directors has given the go-ahead to the planned investment and a summary in this regard can be considered for approval,” a government official said.
Earlier, according to sources, the Cabinet Division had rejected the summary sent by the ministry for joint investment with a Chinese firm in Iraq and asked it to seek prior approval of the PPL board of directors.
Meanwhile, the government is planning to announce a bidding schedule for 36 blocks after resolution of issues that arose following the passage of 18th Constitution Amendment which gave provinces rights over natural resources. However, PPL seems uninterested and sees a dearth of exploration opportunities in the country.
According to statistics, the success rate of exploration in Pakistan, particularly in the case of gas, is better than many countries. From July to December 2011, seven wells were drilled and oil and gas were found in three.
Though the government is going to offer a handsome price of $6 to $7 per million British thermal units (mmbtu) to gas explorers in the new petroleum policy to encourage investment, the joint venture with the Chinese firm is still being formed outside Pakistan.
PPL and Zhenhua Oil Company of China have joined hands to participate in Iraq’s fourth licensing round for exploration blocks. They are interested in two blocks and are expected to make a joint investment of $200 million if they win the bid.
According to an arrangement between PPL and Zhenhua, both companies have set the ratio of shares at 49:51 (PPL and Zhenhua). However, Zhenhua has the right to increase its share up to 70% with the remaining with PPL.
“Pakistan lacks exploration opportunities since the new bidding round has been on hold and the available opportunity in Iraq cannot be compared with a similar opportunity in Pakistan,” PPL said while responding to queries on investment in Iraq.
Making a comparative analysis of the Petroleum Policy 2009 and 2011 of Pakistan and petroleum policy of Iraq, PPL said the fiscal regime offered by Iraq in the fourth licensing round was based on service contract and was not comparable with the petroleum concession regime applicable in Pakistan.
PPL has submitted economic assessment and feasibility study to the government which is based on results of a joint evaluation of the three Iraq blocks by PPL and its consortium partner.
The study provides an estimate of exploration, appraisal and development activities in each block. The fields are assumed to produce 7% to 8% of total recoverable reserves per annum during the plateau period.
Published in The Express Tribune, April 11th, 2012.
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That's rich -- country that complains that it doesn't have enough energy spends its resources exploring for energy in Iraq. Time to outsource the management of your energy crisis!