Pakistan E&Ps – The worst is not ever yet

March 9, 2021 (MLN): Oil prices have been on a continuous rally since the past few weeks, following months of turmoil that resulted from the COVID-19 world-wide lockdown. Be it OPEC’s decision to maintain supply cuts, or the increase in demand for oil following ease in lockdowns, the trajectory that oil prices have been on is something that the economies across the globe are rejoicing.

Naturally, Pakistan’s Oil and Gas Exploration Sector should be benefitting from this upward movement in international prices too in the form of healthy gains and profit margins. However, the recent figures published by Pakistan Petroleum Information Services (PPIS) have depicted an entirely different pictures of the sector.

According to PPIS, the total oil reserves in the country stood at 266 mnbbls as of December 2020, i.e. almost 51% lower as compared to the reserves of 540 mnbbls recorded during June 2020. The overall gas reserves showed mere growth of 1.4% as they grew from 20.91 tcf in June 2020 to 21.21 tcf in December 2020.

As per a report by IGI Securities, the massive fall in oil reserves was caused by downward revision in Ayesha, Ayesha North, Zainab and Aminah reserves, which contributed about 269mnbbls to the total reserves during 1HFY21. Gas reserves, on the other hand, showed recovery due to increase in reserves for Maramzai and Mari.

Amidst all these movements, MARI was the only company that reported a growth in oil reserves and that too by 3x as compared to the remaining key players. According to the same report, the company benefitted mainly from addition of 1.9mnbbls from Mari, Sujjal, Kalabagh and Togh reserves. The company also reported a 11% increase in gas reserves owing to upward revision in Mari gas field by 529bcf against a total production of 135bcf.

OGDC, unfortunately, found itself on the other end of the spectrum as it reported an 8% decline in oil reserves, the lowest amongst its contemporaries, as well as a 2% decline in gas reserves. Nonetheless, this decline was in line with 1HFY21 production.

POL and PPL both reported a 2% decline in their respective oil reserves. The decline in POL’s oil reserves was due to 1HFY21 production of 1.17mnbbls, while PPL’s oil fell due to upward revision in Dhok Sultan and Maramzai reserves. PPL also reported a 3% decline in its gas reserves, whereas POL’s gas reserves remained flat during the period under review. The decline in the former’s gas reserves was due to upward revision in Maramzai reserves.

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