SOME exploration and production companies want the government to prioritise offshore exploration — a high-risk business owing to the low probability of discovery and formidable costs — in the next bidding round to be convened towards the end of the year. The last offshore drilling attempt at Kekra-1, well off the Karachi coast, had cost the four joint venture partners, including the state-owned OGDC, a whopping $125m. That the E&P players are willing to delve into this area despite the fact that offshore drilling in Pakistan has never yielded a commercial discovery underlines their confidence in the potential of such ventures. A successful offshore gamble could produce much better results than an onshore venture and help local companies rope in foreign investors as their JV partners even if the prospects of discovery are as low as 8pc as in the case of the Kekra well. Besides, the data gathered so far shows better offshore exploration prospects than onshore ventures.
Pakistan’s reliance on imported energy is increasing with the passage of time. Currently, the country meets more than 70pc of its energy requirements through imports, which form almost a quarter of the total import bill and obstructs economic growth. Although gas has been the most crucial domestic energy source, no major discovery has been made for the past decade or more with domestic production declining to 3.6bcfd. Likewise, oil production has plummeted to 75,000bpd from a peak of 95,000bpd in 2015. Recent discoveries were small. There is no chance of reversing the declining trend in the short term since there is no major project in the pipeline which could contribute to local gas production. In the last 15 years, there has been only one major gas discovery bigger than 1TCF and only two oil discoveries greater than 50mmbbl. Most foreign companies have left Pakistan, and new exploration is on the decline because of poor prospects of big discoveries, security issues in Balochistan, delays in decision-making and frequent changes in commitments to E&P companies. Pakistan has a vast, challenging sedimentary area yet to be explored. The E&P companies need to be encouraged by ensuring a helpful business environment and security, as well as through tax, price and policy incentives for enabling them to undertake high-risk onshore and offshore exploration activities and to exploit unconventional hydrocarbon resources. An increase in E&P activity will reduce our dependence on imported fuels and expand downstream economic activity besides creating jobs.
Published in Dawn, April 17th, 2021