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, 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 (Southeast), Punjab (Northeast), Balochistan (Southwest) and the North West Frontier Province. Three geologic basins are encompassed in these areas, 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. The new government (1999) recognizes the importance of the oil / gas industry, and is pressing ahead with its privatization program and plans to increase domestic gas production.

Exploration. Pakistan is not a major oil producer. In 1999, its output was 55,000 bopd, including condensate. Its net oil imports were 293,000 bpd, with a significant use of fuel oil imports for power generation. Reserves are in the range of 300 MMbbl. The natural gas picture is brighter, with reserves in the 25 Tcf range and production presently meeting consumption at 2,300 MMcfd. New field developments should meet gas needs for several years, delaying proposals for imports via pipelines.

Wood Mackenzie reports that, during the last three quarters of 2000 and first-quarter 2001, nine new exploration licenses were awarded, as summarized here by province and basin: Sindh/LI and MI: Petronas, 1; OMV, 2; BP (UTPI), 1; POL, 1. In Punjab/UI: OGDCL, 2; PPl, 1. And Ocean Energy was awarded offshore Makran Central block south of Pasni / Gawadar. Three development and production licenses (D & PL) were also awarded. Sindh / LI: BP (UTPI) for Sakhi Deep and Meyun Ismail Deep fields; and Lasmo (now Agip) for Bhit field.

During this same period, 16 exploration licenses were fully relinquished. OGDCL dropped four licenses in Punjab (UI), Balochistan (MI), Balochistan / Punjab (MI) and Sindh (MI); POL, three in Punjab (UI) and Sindh (LI); OMV, two in Sindh and Punjab (MI); POGC, two in Punjab (MI); BHP and PPL, one each in Sindh (LI); Hycarbex, one in Sindh (MI); Ocean Energy relinquished offshore Pasni South and East blocks. And BP relinquished 20% of its Badin III license area.

In August 2000, the government said it will offer special incentives for offshore exploration, particularly in deep water. At that time, 23 domestic / foreign companies were engaged in oil / gas exploration. The ministry also gave the go-ahead for resumed exploration by OGDCL, Tullow, Occidental and Lasmo (Agip) in some "highly prospective blocks" in Balochistan, after years of force majeure suspension due to law / order problems.

In the last three quarters of 2000 and first-quarter 2001, Wood Mackenzie listed 26 exploration wells as significant completions, including three appraisals. Seventeen of the wildcats were reported dry, six discoveries were noted. OGDCL found dry holes in Burzi-1, Sia Koh (MI); Chandesri 1, Bitrism (LI); Khokhar South 1, Tando Allah Yar (LI); and Sadkal C Deep 1, in Sadkal (UI); it found oil / gas in Chanda Deep 1 in Shakadara (UI). Tullow drilled four dry holes with Khairgarth 1 and Khan 1 in East Badin (MI); and Gupchani 1 and Lailian 1 in Nawabshah (LI). PPL found gas in Sadiq X-1 in B22 (MI) and drilled a duster in Yusuf X-1 in the same concession. POL’s two wildcats, Southern Sindh X-1 and Turkwal Deep 2 were drilled in S. Sindh (LI) and Central Potwar (UI), respectively.

BP found gas / condensate in Junathi South 1 in Badin III (LI), but its Dabhi Deep 1 in Dabhi (LI) was dry. ARCO (now BP) found gas / condensate in Jhaberi 1 in Dabhi (LI). Lasmo (Agip) had a gas discovery and a dry hole in Andhar 1, Kirthar W (LI) and Bhit Mughalkot 1 in Kirthar W and Kirthar (LI), respectively. Premier added to Bolan (MI) gas with Zarghun South 2 appraisal, and to Dumbar (LI) with gas discovery Dureji 1.

Mari Gas Co. has two successful gas appraisals with Mari Deep 3 and 4 in Mari (MI). Dry holes were logged by three operators: OMV, Suji 1, Khanpur (MI); Hycarbex, Jacobabad 3, Jacobabad (LI) ; and POGC, POGC Sabzal 1, Sabzal (MI). And offshore, Ocean Energy’s Gawadar 1 wildcat was reportedly dry. This was Ocean’s second offshore well since Pasni 1, the first offshore well in Pakistan since 1990 – both wells are essentially tight holes. A news report in mid-2000 said POL had found more oil / gas with Pariwali 3 at 15,000 ft. Wells 2 and 3 were added with benefit of seismic after the 1994 discovery.

Development. With its modest oil reserves and significant imports, domestic oil production, centered on the Potwar Plateau in Punjab and lower Sindh, is encouraged. The most important oil discovery to be developed is Pariwali on the Potwar Plateau, the No. 3 discovery produced 2,500 bopd on test.

With oil imports to rise in coming years, demand for refined products exceeds domestic refining capacity, so nearly half of the imports are refined products. The Pak-Arab refinery came on in 2000, adding 100,000 bpd capacity. Another planned project is the Iran-Pak refinery to be located near the border. Oil would come by sea from Iran – negotiations are continuing.

Natural gas development is accelerating, with demand to increase 50% by 2006, and plans to fuel power plants with gas, in place of fuel oil. Major gas producers include POL, OGDCL and Mari Gas Co., which account for 85% of total output. The largest fields are Sui, at 650 MMcfd, Adhi, Kandkhot, Mari and Kandanwari.

The government prepared a comprehensive, two-phase program to develop new gas fields last year. Phase 1 would address Hassan, Zamzama, Miano, Sawan and Bhit fields, to be completed by December 2002 and add 450 MMcfd production. Phase 2, to be completed mid-2003, would develop additional reserves at Sawan and Zamzama, and bring on Mari Deep and Sui Deep. The program will exploit discoveries in Sindh and Balochistan and require 240 mi of new transmission lines to augment the infrastructure. Other field developments noted include: PPL’s Mazarani; Tullow’s Charchar in Kandhkot East; plus Zarghan and Badhra. E&D work in Quadirpur is being resumed by OGDCL under tight security after problems with tribal outlaws.

These efforts essentially meet domestic needs for a while, putting three optional proposals for gas imports by pipeline on the back burner. These include an Iran-Pakistan-India pipeline; a pipeline from Turkmenistan passing through Afghanistan; and linking Pakistan to the Dolphin project, which supplies gas from Qatar to UAE and Oman.