January 15, 2019 (MLN): Many companies and Government officials have been terming the offshore exploration by E&P companies for a deep-sea drilling as a possible ‘Game Changer’ for Pakistan. A report by Topline Securities suggests that the anticipated discovery might be even bigger than the Sui field with estimated reserves of 3-8 Trillion Cubic Feet, or 25%-40% of Pakistan’s total gas reserves.
OGDC and PPL, along with several other international partners have formed a Joint Venture to spud the Kekra-1 exploration well in Indus G block, the cost of which is estimated to be US$70-80 million. These companies will be able to assess the potential hydrocarbon flows from this offshore drilling as well as their economic viability by the end of third quarter of FY19.
The report estimates that at Arab Light Crude US$60/bbl, the gas from Indus-G will be priced at US$7.2/mmbtu with additional US$1/mmbtu as an incentive for first three discoveries in offshore area, offering a premium of 80%, in comparison to the average applicable pricing on onshore blocks under older policies.
Moreover, the Petroleum Policy 2012 exempts E&P companies from paying any royalty for the first four years after commencement of commercial production from offshore field, providing further incentives to these companies
The importance of this endeavor was further stressed by the Prime Minister himself, as he believes that any substantial discovery would be a good catalyst for not only E&Ps in Pakistan, but also for attracting foreign investment into the sector.
Regarding the attainment of above mentioned endeavor, an analyst from Topline Securities told Mettis Global News that the success ratio might range from 10 to 20 percent, keeping in view the past failures of Pakistani E&Ps to reach the target reservoirs.
“The success of this endeavor will not only offer several benefits to the E&P sector, but will also provide much needed relief to Pakistan’s diminishing oil & gas reserves” he said.
“However, if the drilling in Indus-G turns out to be unsuccessful again, it would shatter the confidence of both E&Ps as well as foreign companies to invest in Pakistan”, he added
“Nevertheless, many analysts as well as government officials are hopeful this time” he opined.
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