Islamabad:
The government has once again failed to attract domestic and foreign investors to pump capital into hydrocarbon blocks, as a chronic cyclical debt and bureaucratic hurdles hampered progress on plans to increase Pakistan’s oil and gas production.
The government received a poor response in a recent round of tenders conducted to grant licenses to explore for potential hydrocarbon reserves in different locations.
The Director General of Petroleum Concession (DGPC) had floated bids for 10 blocks but received bids for only six. Existing oil and gas exploration companies participated in the competition.
Due to the war in Ukraine, international oil prices have risen, which promises higher returns for oil and gas companies. Pakistani companies also posted windfall gains.
However, bureaucratic hurdles, policy inconsistencies, poor economic conditions and uncertainty about the movement of the Pakistani rupee are weighing on investors’ minds, preventing them from making attractive offers.
Over the past several months, several companies have been unable to open letters of credit to import the necessary equipment due to a lack of dollars in Pakistan.
In a statement on Friday, the Petroleum Department said the bid unsealing committee, chaired by the DGPC, has publicly disclosed the bids on November 30, 2023 for 10 onshore blocks for the grant of oil exploration rights.
He received bids for six blocks. The highest bidder for two blocks was UEP (100%), while Pakistan Oilfields Limited (40%) with joint venture partners Pakistan Petroleum Limited (30%) and Oil and Gas Development Company (30%) bid for one block . OGDC (100%) bid for two more blocks while PPL (70%) with partner OGDC (30%) bid for one block.
The minimum investment required to be made by exploration and production (E&P) companies will be $23.25 million over three years.
Reading: “The restructuring of the domestic debt will be painful”
In addition to E&P activities, successful companies will spend over $540,000 on welfare projects in their respective divisions. In blocks where discoveries are made, investments of several hundred million dollars will be made to produce hydrocarbons.
Experts say bureaucratic hurdles have been a major factor discouraging the oil and gas exploration sector. Almost all foreign exploration companies have left the country due to such obstacles and poor economic conditions. Inconsistency in policies also plays a role in alienating foreign companies.
Experts point out that important discoveries were made before the year 2000, when well prices were attractive. The Qadirpur gas field was also discovered during this period.
As there had been no major discoveries in recent decades, experts say, foreign companies saw no potential, which is why they stayed away from the bidding process.
Published in The Express Tribune, December 2n.d2023.
Like Businesses on Facebook, follow @TribuneBiz on Twitter to stay updated and join the conversation.
a href=”https://tribune.com.pk/story/2448635/ep-firms-give-poor-response”>Source link
