After a long break, Pakistan has relaunched a programme for oil and gas exploration, exploitation and development activities, onshore and offshore, aiming at recovering the untapped indigenous hydrocarbon resources.
Petroleum, a vital economic sector, is heavily dependent on oil and gas imports to meet the ever-growing demand based on growth in population and increasing urbanisation, and the issues of national security require prioritising the balanced energy supply-demand management.
Total recoverable resources of crude oil and natural gas are depleting at alarming levels; the nation has consumed about 81 per cent of total oil reserves and above 69pc of cumulative gas reserves. Pakistan had proven oil resources of 1,245 million barrels, whereas 1,012m barrels were consumed as of June 30, 2022. Crude oil production during this period was 73,436 barrels per day (bpd), representing just 17pc of the country’s total yearly oil consumption.
In other words, the remaining indigenous oil reserves of 233mn barrels will be exhausted totally within eight or nine years, given the present rate of production, in case discoveries of crude oil reserves are not made.
Pakistan has consumed about 81pc of total oil reserves and above 69pc of cumulative gas reserves
Likewise, the total recoverable resources of natural gas were 63.24 trillion cubic feet (TCF), consumed 43.73TCF, and the balance of 19.51TCF gas reserves are available. Currently, natural gas production is 3,390MMCFD (million cubic feet per day). With the current rate of production, indigenous natural gas will contribute to total gas consumption for another fifteen years or so.
However, according to the projections made in the Pakistan Energy Outlook Report 2021-2030 of the Ministry of Planning, Development and Special Initiatives, indigenous production will reduce by 2030 to 51,029bpd of oil and 1,627MMCFD gas.
According to various studies conducted in the past, Pakistan has extensive oil and gas resources, largely located in Balochistan, Sindh and Khyber Pakhtunkhwa. A United States Agency for International Development (USAID) study concluded that 14 billion barrels of crude oil was technically recoverable in the Indus basin alone. Therefore, the significant potential to increase the production of crude oil and natural gas exists to meet energy needs in the future.
Sadly, exploration and production activities have constantly declined in recent years and average wells drilled in potential areas for oil and gas deposits have been significantly low. On the other hand, exploration for discoveries for oil and gas is not being carried out effectively and timely in the prospective areas.
The government has reinstated 11 licenses of three petroleum companies that failed to do the committed works during their licensing period. One company, awarded in 2007, hasn’t drilled a well in 16 years but was given another extension.
On the other hand, there is an obvious lack of interest, both by the domestic and international investors, in acquiring licenses for petroleum rights and exploration licenses in Pakistan primarily due to world economic climate and security concerns in Pakistan.
There is an obvious lack of interest, both by the domestic and international investors, in acquiring licenses for petroleum rights and exploration licenses
Only three of 18 oil and gas blocks were bid on in January, resulting in two blocks being awarded to OGDCL and one to a private investor. The remaining 15 blocks have not yet been put up for bidding.
Meanwhile, the government has invited bids from international and domestic investors for Exploration and Production (E&P) in another 10 Petroleum Blocks until November 15. These are Saruna West, Kotra East, and Kalat North, located in the Balochistan Basin, which is the largest gas discovery, with estimated gas resources of 78TCF and oil of 8,676mn barrels.
Blocks in Sindh include Gambat-II, Murradi, Malir-II, Sawan South, Mithiari, and Zamzama West. All these Blocks in Sindh are located in the Lower Indus Basin, which has estimated oil resources of 164mn barrels and gas of 24.6TCF.
Rachna-II Block is located in Punjab (Middle Indus Basin). Indus Basin is known for having oil and gas resources of 200m barrels and 196TCF, respectively.
Earlier, four new exploration Blocks were awarded in November to a joint venture (JV) of Oil & Gas Development Company (OGDCL), Mari Petroleum Co Ltd (Mari) and Pakistan Petroleum Ltd (PPL). These are South Pishin, Shaigalu, Tanishpa and Lugai Blocks in Balochistan.
OGDCL and Pakistan Oilfields Ltd obtained an exploration license for the Chah Bali Block in Balochistan in May, whereas three new exploration Blocks were awarded to the JV of PPL and United Energy Pakistan, and two blocks to Mari in April 2022 on competitive bidding.
Efforts to exploit non-conventional natural gas resources from shale and tight rocks, which may also contain oil, have had limited success. Studies indicate a potential of 3,778TCF gas in place, with 2,323bn barrels of oil. Developing shale gas is costly due to complex geography, limited water resources, security concerns, and environmental constraints.
The government has also planned to auction offshore blocks next year through domestic and international bidding. In this context, applications have been invited in September from global companies for marketing of twenty offshore petroleum blocks located in the Indus Basin and Makran Basin. Pakistan has a large offshore basin with considerable potential for hydrocarbon discoveries, but it largely remains unexplored so far.
The writer is a retired Chairman of the State Engineering Corporation
Published in Dawn, The Business and Finance Weekly, August 28th, 2023