Oil, gas exploration: New blocks to attract $371m investment in first phase

Domestic giants win most of the licences, foreign firms shy away.

ISLAMABAD:

The government has provisionally awarded licences for 50 blocks to exploration and production companies for the search of oil and gas across the country, which will attract an investment of $371 million in the first phase.

Of the 50 blocks, state-owned exploration companies such as Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) have won rights for 39 blocks, reflecting poor participation of foreign companies in the bidding round despite attractive incentives in the new petroleum policy.

Speaking at a press conference here on Thursday, Petroleum Minister Shahid Khaqan Abbasi disclosed that the blocks had been awarded to eight companies including two new ones – Canada-based Tallahhasse and local firm Al-Haj Enterprises.

He said among existing companies that had participated in the bidding, OGDC won 29 blocks, PPL 10, one each went to Mari Petroleum, OMV Pakistan and Ocean Pakistan while Oil and Gas Investments got two.



Out of the two new companies, Tallahhasse was awarded one exploration block and Al-Haj Enterprises got two blocks.

Total area of these blocks is estimated at about 103,348 square kilometres, which constitutes around 38% of the area already being explored.

“These blocks have been awarded after going through a consultation process and a unified model petroleum concession agreement has been framed in this regard,” Abbasi said. “Issues with provinces (over energy reserves) have been resolved now.”

The result of investments in hydrocarbon exploration and production by these companies would start emerging in the next three years, he hoped.

Acknowledging the unsatisfactory response from foreign companies, he stressed that the government was working on a plan to encourage joint ventures between domestic and foreign companies to attract investment in the oil and gas industry.

PPL has already entered into joint ventures in Yemen and Iran for exploration activities.



Abbasi declared that licences of the companies that had failed to start exploration work within stipulated time would be cancelled and a process was under way in this regard.

Italy’s Eni will start work on offshore fields from next year, which requires an investment of $100 million.

Highlighting the efforts being made to tap oil and gas reserves in violence-hit Balochistan, Additional Secretary Petroleum Naeem Malik said drilling was under way in Zin block in the province.

“In some areas, results start arriving within one year,” he said, adding the estimated size of recoverable reserves would be clear after drilling of wells.

In resource-rich Balochistan, 21 new blocks have been awarded in the bidding including 14 to OGDC and four to PPL. In Punjab, 15 blocks have been auctioned, Khyber-Pakhtunkhwa eight and Sindh six.

CNG stations

Regarding judgments of the Lahore and Islamabad high courts about restoring gas supply to compressed natural gas (CNG) stations, Abbasi said the petroleum ministry had sought legal opinion on the matter.

“I will appear before the Islamabad High Court on Friday (today),” he said, pointing out that captive power plants of industrial units were getting gas at a price over and above the prices notified for independent power plants (IPPs) and Wapda plants.

Petroleum Secretary Abid Saeed admitted that some captive power plants were getting limited volume of gas.

About appointment of chief executive officers of state-owned oil and gas companies, the petroleum minister said his ministry would take over the process from the commission constituted for the purpose and appoint the new heads.

Published in The Express Tribune, January 24^th, 2014.

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