Far East: Pakistan

FAR EAST

Pakistan

The government approved the new Petroleum Policy in 1994, causing a surge in licensing in 1994/1995. The state oil company, the Oil & Gas Development Corp., was converted in early 1999 to a limited company, to be known as OGDCL. Two other domestic companies are Pakistan Oilfields Ltd. (POL) and Pakistan Petroleum Ltd. (PPL), which operates the large Sui gas field in eastern Balochistan.

The country is divided into four areas, Sindh, Punjab, Balochistan and the North West Frontier Province, and three geologic basins, Lower, Middle and Upper Indus (LI, MI & UI). Most activity occurs in: southern Sindh, east of Karachi; upper Sindh and eastern Balochistan; and upper Punjab, south of Islamabad. Only a few offshore wells have been drilled. Most of the economic sanctions imposed by the U.S. in response to the 1998 nuclear tests between Pakistan and India have been removed, allowing access to international financial markets.

A bloodless coup on Oct. 12, 1999, placed General Pervez Musharraf in the role of Chief Executive of Pakistan, ousting Prime Minister Nawaz Sharif. The new government appears to recognize the importance of the oil / gas industry, and it appointed POL’s former Chief Executive Usman Aminuddin to the cabinet as Petroleum and Natural Resources Minister. It has also implemented the government’s new July 1999 sliding gas price program based on oil price bands.

Exploration. Wood Mackenzie (WM) reports that, during the period April 1, 1999, to April 1, 2000, 17 new exploration licenses and two Development and Production Licenses (D & PLs) were awarded, as summarized here by province / basin: Sindh / LI and MI: OGDCL, 2; Orient, 5; Petronas, 1. In Balochistan: Premier, 1; OGDCL, 1 (MI); Paige, 1. POL was awarded one block in Punjab (UI) and one in Potwar (UI); and OGDCL got one license in NWFP/Punjab (UI). Offshore, IPR picked up Indus B 2869-9 Guddu; and TotalFina was awarded deepwater blocks, B 2969-4 Sulaiman and B 2165-1, in Indus G and H, respectively. And OGDCL got two D&PL licenses in Sindh (LI) – Buzdar and Buzdar South/Deep.

During this same period, 20 licenses were relinquished – notably, six by OGDCL in Misan, and UI/LI areas; ARCO (UTP) four, two in LI, one in MI and one in Balochistan. BG dropped two blocks in MI, and B 2367-2 offshore Indus D. Several companies declared force majeur for weather and tribal problems in western areas. Lasmo dropped its offshore Indus F block. Ocean Energy dropped blocks in Balochistan; and POL and Premier gave up one each in MI.

In the April 1999 to April 2000 period, WM listed 14 significant exploration wells completed, a marked decrease from 1998 – 1999 drilling. OGDCL reported eight wells, including six wildcats – of which five in MI and LI areas were dry; the Chanda 1 in Shakardara (UI) tested O/G; and Tando Allah Yar 3 and 4 appraisals in MI found more oil. Hycarbex’s David 1A in Jacobabad (LI) was dry; PPL’s Sui Deep 1 in Sui (MI) was a gas discovery; BHP’s Zamzama 2 appraisal in Dadu, Sindh, added more gas; but BG’s Basira 1 wildcat in Gambat (MI) was reported dry. Drilling should pick up in 2000. At the end of March, WM reported 12 wells drilling – eight for OGDCL, including Gawadar 1, in shallow water off the SW coast. ARCO, POL and Premier were drilling the Jhaberi 1 (Badin), Turkwal Deep X-2 and Zarghun South 2 (Balochistan), respectively. PPL claimed a key gas discovery in Jacobabad, Sindh, in April with the Sadiq X-1.

Development. The country has modest oil reserves in the 200-MMbbl range, production of about 60,000 bopd, and it imports about 290,000 bopd. The country lacks refineries to process domestic and imported crude; one refining project is under construction, the Pak-Arab JV with Abu Dhabi. And a second plant would process Iranian crude; this Iran-Pak JV is planned near the border.

The country has 22.9 Tcf gas reserves and produces 2.0 Bcfd, all consumed domestically. Principal gas producers are PPL and OGDCL, plus ARCO, Lasmo, OMV and BHP. PPL’s Sui field contributes more than one-third of the total gas. Other large fields are Adhi and Kandkhot (120 MMcfd), Mari and Kadanwari. OMV signed a 15-yr sales agreement to further Miano field development, just north of Kadanwari, expected onstream in early 2001; WM gives the new field 560 Bcf reserves and 175 MMcfd output. Besides Miano, five large gas fields found within the last three years await development – Bhit, Mari Deep, Sui Deep, Zarghun South and Zamzama – with estimated 6.5 Tcf reserves total; as of year-end ’99, none had been approved for development.

With more power generation planned by the Ministry, a 50% increase in gas use is expected by 2006. Imports could reach 1.0 Bcfd by 2002. And major pipeline import schemes are being considered, including 1) gas from Qatar’s North Dome field; 2) a Turkmenistan to Dalautabad, Pakistan, line through Afghanistan; and 3) Iran’s South Pars offshore to Pakistan, possibly continuing into India. In mid-2000, there was not a clear consensus on an accelerated domestic development program, and how this would affect pipeline plans.