Friendly-fire: Pakistan Petroleum grilled on expansion plans

ECC criticises firm for ignoring local exploration activities and expanding abroad.

ISLAMABAD:

Pakistan Petroleum (PPL) is under friendly-fire by the Economic Coordination Committee (ECC) for ignoring to tap local oil and gas reserves and expanding its operations abroad, when on the other hand the government is trying to woo foreign oil and gas firms to invest in Pakistan.

The state-owned PPL is seeking acquisitions in other countries as it announced earlier that it seeks to takeover Ireland-based Tullow Oil’s South Asian assets.

Conversely, the government is organising campaigns and roadshows in Houston and London to attract international giants to take advantage of the recently announced Petroleum Policy, 2012.

During the meeting, the petroleum ministry had to face severe criticism from other ministries held last Tuesday when a summary was tabled to allow PPL to acquire assets of Tullow Oil in Pakistan and Bangladesh.



Sources told The Express Tribune that the Finance Minster Dr Abdul Hafeez Shaikh, Information Minister Qamar Zaman Kaira criticised PPL’s expansion plans abroad while Pakistan had a lot of unexplored sites having potentially enormous oil and gas reserves, which may be utilised to combat the energy crisis.

“PPL should explain how many exploration activities it conducted and how many were in the pipeline for the future?” ministers questioned. They also observed that since PPL was a state-owned entity, its expansion plans will have to be financed through already depleting foreign exchange reserves.

A minister from Federally Administered Tribal Areas (Fata) said that his area had plenty undiscovered oil and gas wells but they were not being discovered by PPL.

The ECC allowed PPL to acquire shares of Tullow Oil subject to approval of the
finance ministry and the State Bank of Pakistan (SBP) as it will require a cover of foreign exchange.

Earlier, PPL had also expressed interest in acquiring assets of MND Exploration and Production in Pakistan and Yemen through share purchases. MND – a wholly-owned London-based subsidiary of KKCG SE – one of the largest privately owned groups in the Czech Republic. Previously, PPL had also bid to acquire Pakistani assets of British Petroleum (BP), which got rejected.

BP and Malaysian-based firm Petronas have already wrapped up their operations in Pakistan and Tullow Oil is the third foreign firm seeking to liquidate its assets and leave the country.

PPL has been expanding its operations domestically and globally as it won exploration blocks in Iraq earlier, where it will invest $100 million.

The ECC was informed that Tullow Oil will divest all its assets in Pakistan and Bangladesh through corporate sales of its indirectly wholly-owned subsidiaries, Tullow Pakistan Development (TPDL) and Tullow Bangladesh (TBL), which are both registered in Jersey.

TBL has a 30% working interest in Block 9 (Bangora field) in Bangladesh which produces a total of 100 million cubic feet of gas per day. In Pakistan, Tullow Oil has five blocks which are jointly owned by Oil and Gas Development Company, Saif Energy and Mari Gas Company Limited.

Published in The Express Tribune, December 15^th, 2012.