Dried-up wells : As gas reserves fall, deep wells need hefty investment

PPL says wells can last another 10 years with money injection.

KARACHI:

Slow recoveries are hampering further investment in depleting Sui gas fields, making it very difficult to inject money into developing deep wells, said Asim Murtaza Khan, MD and CEO of Pakistan Petroleum Limited (PPL).

Speaking to hundreds of shareholders and PPL employees sitting in a jam-packed hall here on Friday, Khan said Sui gas fields were depleting fast but with investments in deep wells, which need a huge investment of $40-45 million each, these could be utilised for another 10 years.

At the gathering – the 61st annual general meeting of PPL – most of the shareholders were keen to know why PPL was investing in Iraq where they thought risk factor was running high. They put up various questions before the management.

Replying to a question, Khan said, “We have carefully considered security conditions in Iraq before taking this decision and we think that benefits actually outnumber the risks.”

“Unfortunately, most of the oil and gas installations in the world face security risks, but it does not mean that one should leave all such places,” he stressed.

PPL was not the only oil company which was exploring oil and gas in Iraq. There were various other companies including firms from India, the UAE and Turkey, which showed that things were going fine despite security concerns, he said. “Furthermore, the government of Iraq has given us assurances about the security situation.”

PPL has five years to complete exploration in the oil-rich Middle Eastern country, unlike Pakistan where such contracts are signed for just three years.

More than once, the shareholders asked the management what the company was doing for uplifting the Baloch communities, especially those which were living on the periphery of oil and gas fields.

Addressing the shareholders’ concerns, the management spoke at length about the activities of the company in Balochistan.

PPL has given at least 1,700 jobs to Bugti tribesmen, established a 50-bed hospital with 10 company-paid qualified doctors and annual expenses of Rs10 million on medicines. The tribesmen are also getting free gas.

In the education sector, bright students are being provided 50 scholarships for study in different universities of the country and there are plans to add 30 more scholarships.

Responding to a question from the media, Khan revealed that 20% of operational expenses of the company in Balochistan were on security issues.

Khan said the company was also focused on fast-track exploration and development activities to bring new discoveries on stream through extended well-testing and early production. The AGM approved financial statements together with auditor’s report for the financial year ended June 30, 2012. It also approved final cash dividend of 65% for ordinary share capital and issue of bonus shares in proportion of 1 ordinary share for every 4 ordinary shares held by members.

This is in addition to an interim cash dividend of 50% already paid to the shareholders, bringing total distribution for the year to 115% cash dividend and 25% bonus shares.

Published in The Express Tribune, September 29^th, 2012.