Kuwait oil firm seeks exit from Pakistan, sells key assets

• KUFPEC to “recoup its investments” by selling assets.
• The company’s decision has raised serious concerns among policy makers.
• PEL also confirms making advances to KUFPEC.

ISLAMABAD: Kuwait Foreign Petroleum Exploration Company (KUFPEC) has begun the process of exiting Pakistan’s oil and gas sector by selling its major assets to Pakistan Exploration (Private) Limited (PEL) for around $60 million, according to a senior official of the Ministry of Energy. talk to The News on Monday.

“Foreign E&P companies are increasingly frustrated, mainly because of the huge cyclical debt in the gas sector, which has reached Rs 2,700 billion,” the source told the publication.

“Of this, Rs 1,500 billion, including $600 million owed to local and foreign Exploration and Production (E&P) companies, remain unpaid due to defaults by gas companies. The 12-month delay in approving amendments to the 2012 E&P policy also contributed to KUFPEC decision,” the source said.

According to the official, KUFPEC has taken the decision to recover its investments by selling its concessions and assets in various blocks around Pakistan in order to reinvest in other countries.

In April 1981, KUFPEC was established as a division of Kuwait Petroleum Corporation (KPC). The company’s main focus is finding, developing and extracting natural gas and crude oil outside of Kuwait. It operates in ten nations on five continents — Europe, Asia, Africa, North America and Australia.

Specifically, KUFPEC stated in a press release on November 23, 2023, that it has signed Memoranda of Cooperation (MoUs) with several Pakistani companies, including Prime Pakistan Limited, Mari Petroleum Company Limited (MPCL) and Oil and Gas Development Company Limited (OGDCL). Strengthening KUFPEC’s exploration portfolio, strategic alliances and asset value in Pakistan was the objective of the MoUs.

KUFPEC CEO Mohammad Al-Haimer said at the time: “The MoUs are not limited to strengthening strategic partnerships to expand our exploration portfolio in Pakistan, but also provide significant opportunities to enhance KUFPEC’s assets, independent assessments peer-to-peer, sharing knowledge and leveraging the expertise of our global partners.”

However, just a year later, KUFPEC’s decision to sell its assets and concessions has raised serious concerns for policy makers in Pakistan. When contacted, PEL confirmed the acquisition, stating, “Yes, we have acquired the assets of KUFPEC Pakistan after winning the bid.”

However, the company refused to disclose the value of the asset, citing non-disclosure agreement (NDA) obligations. PEL also confirmed that it has made advances to KUFPEC. According to a press release on PEL’s website, the acquisition includes assets in Pakistan’s Dadu, Kirthar, Tajjal and Qadirpur concessions, along with the Bhit and Qadirpur leases.

“This strategic acquisition marks an important milestone for PEL as it expands its exploration portfolio and strengthens its presence in Pakistan’s energy sector. It underlines PEL’s commitment to discover and tap into the country’s energy potential,” the statement said.

The acquisition is in line with PEL’s long-term strategy to explore energy opportunities and unlock Pakistan’s vast natural resources. “We are confident that these assets will help us meet Pakistan’s growing energy requirements,” PEL said.

PEL reiterated its commitment to the exploration and development of Pakistan’s natural resources and its role in contributing to the country’s energy security and sustainable development.