Work on remaining 12 sites to start soon: PPL MD By Saad Hasan
Friday, December 25, 2009
KARACHI: Pakistan Petroleum Limited (PPL), which intends to expand search for petroleum reserves in coming months, signed formal agreements with the government on Thursday to start exploration work in two areas in Sindh.
The petroleum exploration licences were granted for Jungshahi and Gambat South blocks following a bidding round for prospective areas held earlier in the year from which the PPL emerged with the highest number of blocks.
Initially, the PPL will invest a minimum of $17 million as part of licence’s commitment to conduct surveys and drill exploratory wells, says Khalid Rahman, the Managing Director. “Then we will move on accordingly. If there is prospect, we will invest more.”
He said there was no specific reason to start exploration from Sindh, which has become the highest gas producing province of the country. “We will increase the number exploration blocks gradually.”
PPL won 14 exploration blocks under the Petroleum Policy 2009 that offers better price of gas than the previous policy of 2007. The company already has interest in 22 exploration blocks.
But chances of finding new reserves have diminished in past decade with little success in discovery of new gas reserves and exploration of most of the prospective sites. “At this point of time, our expectations are positive,” Rahman said, “but only God knows the extent of success.”
State-owned PPL posted a profit of Rs27.7 billion in 2008-09, up 47 percent over the previous year, following a substantial increase in gas price, which moves in tandem with international crude oil.
It produces up to 1 billion cubic feet of gas per day but nearly half of the sales revenue comes from the Sui field, which is located in volatile Balochistan. By June 2009, PPL’s net recoverable reserves have depleted to 3.3 TCF from 3.7 TCF a year earlier.
PPL is increasing its portfolio of exploration blocks at a time when rigs and exploration service providers are available in wake of crash in crude oil price, industry people say. The company has also forgone its plan to search hydrocarbon reserves abroad and shifted all its resources for domestic exploration.
Besides searching for new reserves, PPL is also trying to increase production from existing fields with focus on Kandhkot and Adhi fields, located in upper parts of Sindh and Punjab respectively. New wells are also being dug in Sui after a gap of five years to stop rate of depletion.
With increase in consumption, Pakistan’s gas reserves are shrinking fast. Just enough gas, which is the most used fuel in the country, is left to meet requirements of next 20 years.
There has not been any major discovery in last decade even when rising consumption has outpaced production of 4 billion cubit feet (BCF) per day. Country’s reserve replacement ratio, which is an indicator of how much used reserves have been replaced by new finds, has dropped to low levels of 49 percent.
Worsening security situation in NWFP, FATA and Balochistan has discouraged exploration in the least-explored parts of the country.
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