Niko is a Calgary-based independent international oil and gas company with operations in India, Bangladesh, Indonesia, Kurdistan, Trinidad, Madagascar and Pakistan. It is one of the fastest growing companies in the industry with market capitalisation of over $5 billion in the Toronto Stock Exchange under the symbol NKO. PHOTO: FILE
Canadian oil and gas exploration firm Niko Resources (Pakistan) Limited (NRPL) has decided to pack up and quit Pakistan apparently because of low wellhead gas prices that make it difficult to sustain operations.
NRPL, a subsidiary of Canada’s Niko Resources Limited, was exploring hydrocarbons in four offshore blocks in Indus namely Indus-X, Indus-Y, Indus-Z and Indus North. The company has collected 2,000 square kilometres of 3-D seismic data in these blocks.
“Now, Niko Resources has served a notice, announcing its decision to quit these four blocks and wind up the company in Pakistan,” an official said.
Niko is a Calgary-based independent international oil and gas company with operations in India, Bangladesh, Indonesia, Kurdistan, Trinidad, Madagascar and Pakistan.
It is one of the fastest growing companies in the industry with market capitalisation of over $5 billion in the Toronto Stock Exchange under the symbol NKO. The government of Pakistan had awarded the four blocks to Niko in March 2008 for offshore drilling.
According to sources, low wellhead gas price for offshore fields was one of the key reasons which forced Niko Resources to stop operations in Pakistan.
“Drilling of an onshore well requires expenditure of $15 million whereas an offshore well needs spending of $80 to $100 million,” a source said, adding exploration companies working on offshore fields had been demanding more incentives to make drilling for oil and gas economically viable.
Sources revealed that Canadian High Commissioner to Pakistan met Federal Petroleum and Natural Resources Minister Shahid Khaqan Abbasi in the first week of July. During the deliberations, Abbasi asked the high commissioner to persuade Niko Resources to take back its decision of leaving Pakistan as the government “is now offering incentives for offshore drilling.”
In the new Petroleum Policy 2012, the price of gas discovered in the Offshore Shallow Zone will be $7 per million British thermal units (mmbtu), for Offshore Deep Zone the price will be $8 per mmbtu and for Offshore Ultra Deep Zone the price will be $9 per mmbtu.
A bonanza of $1 per mmbtu has also been announced for the first gas discovery in the offshore field.
Abbasi told the diplomat that Pakistan had huge reserves of natural resources and there were ample opportunities for investment in the oil, gas and mineral sectors. “We welcome Canadian investment and technical support in the oil and gas sector in Pakistan,” he said.
Pakistan has a vast onshore and offshore sedimentary area covering 827,268 square kilometres, of which around 30% is being explored.
Owing to existing opportunities, transparent and predictable policies and presence of major international exploration firms like ENI and BHP, there is vast potential of investment in Pakistan, Abbasi said.
Published in The Express Tribune, July 27th, 2013.
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Sometimes, the low price of gas can force oil and gas companies to stop operations and resume them later, when it becomes economically viable. It is important for oil and gas companies to analyze the profitability of their drilling operations and take steps to boost the revenues of the oil and gas company.
Niko is not a substantial company, there own annual report said they have huge problems in financing, their fields are declining at 50% per year, the decision to reliquish has more to do with lack of funds than any other
@Mirza: Mirza Sahib, you always talk with solid LOGIC. but in Pakistani dictionary, that word no more exists. I am not a friend of PPP of yester or today, I floated an idea that Zardari sahib has done very proper job, that no quid or dictator ever did. so why not use his services, than " choosing" from retired lot of generals or judges. but Mirza sahib, there is one commodity called LOGIC, which we in Pakistan, never have had. Regards Mirza Sahib.
Can anyone Blame them ? This is the reason why Pakistan will always lack Foreign Investments, as there is simply no infrastructure, nor energy provisions or security in this Land of Pure !
After Riko -Dehko incident where Pakistan Government broke promises and pledges ...most Foreign companies are afraid to invest.
This is the second Candian resource company leaving Pakistan in last few months. Pakistan does not have infrastructure or vision to harvest resource. All they want to know is where is my cut. Niko could have provided frecking technology and infrastructure required to go with it to Pakistan.
@Rakesh: 500 million dollars are being invested by Nestle in their new Milk processing plant. 400 million is being invested by P&G to upgrade their existing plant. 150 million dollars is being invested by Yamaha motors to setup state of the art plant in Pakistan. In last one year 5 of the largest US based food chains have invested in Pakistan. Kindly do some reserach before shooting off ill informed emails. Why not send an email to Delhi water and sanitataion department to make sure the international airport doesnt get flooded again instead of wasting time on Pakistani news websites.
@Hamid: Have you been sleeping Hamid? We are in the 21st century now! Oops, i forgot Pakistan is in a different timezone... The middle ages.
@Kala Khan:
I live in the western part of India. Never realized we want separation !!! News to me ...
Its unbelievable they even invested in Pakistan, What were they expecting ? You dont invest in Somalia, Pakistan and such countries. There is a reason for that. Its a civil war scenario now in Pakistan
@Kala Khan: Two main factual errors in your post: 1) Mirza is a rquent poster and everyone knows he is a Pakistani based i US 2) The only insurgencies in India are in east. There are no insurgencies in the western part of India at this time.
Good riddance. What we need is investment in alternative, clean energy sources, which will bring Pakistan into the 19th century.
Give it to the Chinese and free of any kick back.
My two cents for Niko resources. They don't deserve mentioning on a paper like ET.
Good examples of why the govt should stay out of pricing of energy - your not Iran and should be paying market prices just like the rest of the World. Higher energy prices will decrease demand, reduce power outages, and incentive producers to find/produce more oil/gas.
@Mirza: Typical indian troll - you are ;) - what about BALKANindia?? we here see the separatist movements there at your end as well son! majority of your west wants separation and a lot of physical area enjoys no writ of the government. and yet you talk of talibanistan :D
Kurdistan is not a country
Pick the odd one out!
No matter what we say or their excuse may be, unless we improve safety and security of civilians there is not going to be foreign investment by western world. Only communist China can send his people in danger in Talibanistan.
Asking for commissions, PMLN style. They are as good as PPP 10% walla. Difficult to trust these angels elected to office.