E&P companies will invest $33 million for oil and gas exploration

Islamabad:

Exploration and production (E&P) companies are set to invest $33.3 million over the next three years in eight blocks to search for hydrocarbon reserves in a bid to overcome the country’s energy crisis.

These companies on Wednesday signed petroleum concession agreements (PCAs) with the government and got exploration permits.

The exploration blocks awarded to the Oil and Gas Development Company (OGDC) were Kotra East (2,867-8), Murradi (2,767-7), Sehwan (2,667-19) and Zindan-II (3,271-9).

Pakistan Oilfields Limited (POL) got Multanai block (3,168-3), while Sawan South (2,668-26) went to United Energy Pakistan Limited (UEP) – a Chinese E&P company.

Gambat-II block (2,668-25) was awarded to a joint venture of Pakistan Petroleum Limited (PPL – the operator) and OGDC while Saruna West (2,666-1) was awarded to the joint venture of POL (the operator), PPL and OGDC.

The PCAs and exploration licenses were signed by Petroleum Department Secretary Momin Agha, Director General Petroleum Concession Kashif Ali, OGDC Managing Director Ahmed Hayat Lak, POL Chairman and Managing Director Shuaib A Malik, PPL Chief Operating Officer Sikandar Ali Memon and the head of UEP Exploration Dr Nadeem Ahmed.

Speaking at the ceremony, Energy and Petroleum Minister Muhammad Ali said such efforts would bear fruit in the form of additional hydrocarbon reserves for the country’s consumption in the coming years.

Reading E&P companies give poor response

He stressed that exploration licenses and PCAs will not only boost investment in the oil sector but also help bridge the gap between energy demand and supply.

The minimum investment to be made by E&P companies in the awarded blocks to find hydrocarbon deposits will be over $33.3 million over three years.

For blocks where discoveries are made, investments of several hundred million dollars will be made to extract oil and natural gas. In addition, these companies must spend at least $30,000 per year in each department on welfare programs in their respective areas.

Earlier, the Petroleum Directorate submitted bids for the auction of 10 blocks, but no foreign company came forward to bid. Pakistani companies, mostly state-owned, participated and bid for six blocks.

A bid unsealing committee, headed by the director-general of oil concessions, publicly disclosed the bids on November 30, 2023 for 10 land blocks for the granting of oil exploration rights.

The poor response is nothing short of a setback at a time when the government is working hard to attract foreign investors. Almost all foreign energy companies have left Pakistan due to policy inconsistencies, corruption cases and bureaucratic hurdles.

Over the past decade, Pakistan has relied primarily on natural gas imports as its reserves have been depleting at a rate of about 6% per year.

Published in The Express Tribune, January 25^u2024.

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