Oil and gas companies are waiting for incentives to boost production

Islamabad:

Oil and gas exploration companies have asked the new government to formulate a policy that will provide incentives to optimize hydrocarbon production from existing fields to ensure the country’s energy security.

Sources told The Express Tribune that several oil and gas exploration companies were allowed to install advanced technology in their existing fields in a bid to boost production to overcome the energy deficit in Pakistan.

These exploration companies produce oil and natural gas under the old oil policies that offer low prices. Now, they require additional money to spend on incremental production from these fields.

Earlier, the caretaker government approved amendments to the oil policy to allow exploration companies to sell 35% of the extracted oil and gas to third parties.

In addition, he enacted a new tight gas policy and offered incentives to explore tight gas fields to add to the country’s depleted reserves.

After the policy was approved, the country’s largest state-owned hydrocarbon explorer, Oil and Gas Development Company Limited (OGDCL), initiated plans to drill up to 80 wells to exploit tight gas.

OGDCL took the lead by installing new technology and started working on different wells to boost hydrocarbon production without additional incentives. Its management is proceeding with a pilot project of elementary production under its own responsibility.

However, other oil and gas exploration companies have been reluctant to begin work on phasing production from existing fields due to a lack of price incentives.

Industry officials point out that the government spends a huge amount of dollars on imports of liquefied natural gas (LNG), which is much more expensive than domestic gas.

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They complain that local oil and gas exploration companies are being ignored while the country relies more on LNG imports to overcome the natural gas crisis.

However, OGDCL has set a target to increase crude oil production to 50,000 barrels per day (bpd) to meet more consumer demand, which will help reduce imports as the country faces a shortage of US dollars.

Soon after taking charge as the Managing Director of OGDCL, Ahmed Hayat Lak formed a task force on production optimization to increase power generation with optimal use of modern technologies.

A dedicated team within the company is stepping up efforts to enhance oil and gas production through technological interventions and focusing on existing wells and deposits. The company aims to increase crude oil production from 32,000 bpd to 50,000 bpd in a five-year period, with incremental production each year.

Under the plan, about 2,000 bpd will be added to total production in FY 2023-24, 9,379 bpd in 2024-25, 12,104 bpd in 2025-26, 16,286 bpd in FY 2026-28,27 and 2027 bpd.

Any increase in domestic crude oil production will be seen as a relief to the country’s fragile economic situation. OGDCL utilizes state-of-the-art technology including electric submersible pumps. In addition, it promotes indigenization to reduce dependence on imports by attracting local manufacturers and reducing imports by 25%.

Notable successes include significant production improvement in the Siab-1 well and improved performance in the Nim East-1 exploration well. Rig-less operations and new drilling have led to significant increases in oil, natural gas and liquefied petroleum gas (LPG) production at various wells, demonstrating the company’s commitment to optimization and performance.

These achievements underscore the proactive approach to addressing Pakistan’s energy needs while mitigating import dependence. By leveraging technology and enhancing local industry participation, OGDCL says it is paving the way for sustainable growth in the oil and gas sector, contributing to the country’s economic resilience and energy security.

Published in The Express Tribune, April 13^u2024.

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