Oil and gas exploration firms, on Wednesday, announced the discovery of gas reserves at 2.25 million standard cubic feet per day (mmscfd) at Tolanj’s West-2 development, located in Kohat, Khyber Pakhtunkhwa (KP).
In a notification to the Pakistan Stock Exchange (PSX), Oil and Gas Development Company Limited (OGDCL) said the discovery had de-risked an exploration play in the deeper reservoirs over Tolanj West D&PL and in TAL Block, leading to new upside opportunities.
“This discovery will also help and contribute towards improving the energy security of the country from indigenous resources and add to the hydrocarbon reserves base of MOL, its joint venture partners and the country,” it added.
The Tal joint venture comprised of MOL Pakistan (operator), OGDCL, Pakistan Petroleum Limited (PPL), Pakistan Oilfields Limited (POL) and Government Holdings Private Limited (GHPL)
Tahir Abbas, Head of Research at Arif Habib Limited told the Express Tribune that the discovery was relatively small when compared to the country’s demand.
“This (2.25 mmscfd) is a very small discovery considering the growing shortfall of oil and gas reserves in the country,” he said.
Explaining that a more aggressive approach was required by exploration firms he said, “The excessive dues, persistent delays in announcing a new oil and gas exploration policy, and an exit of foreign exploration firms have impacted the drive for discoveries over the years.” Receivables due to OGDCL and PPL from the government have mounted to Rs650-700 billion. The new petroleum policy of 2021, that may incentivise exploration firms to accelerate their discovery rate, is still awaited he said.
Adding that, “Pakistan needs large discoveries to overcome the growing shortfall – like the one it made decades back in Sui for gas in 1952 or for oil in Tal block in 2005-06.”
While oil and gas reserves have been depleting at 10-15% per annum, new discoveries remain insufficient compared to the growing shortfall. Gas production has reduced to around 3,300 mmcfd compared to over 4,000 mmcfd some three years ago, while the demand for gas stands at over 8,000 mmcfd today. Similarly, crude oil output has dropped to slightly over 70,000 barrels per day at present compared to over 90,000 barrels per day some three years ago, he lamented.
Abbas explained that the share of energy grew to over 25% in total imports worth $80 billion in the previous fiscal year ended June 30, 2022. “The growing demand for energy against depleting supplies has increased the nation’s reliance on imported energy,” he said.
In July 2022, the Standard Capital Securities reported that local gas production is at alarming stage.
The gap between total demand and local production has widened to 58% in the previous fiscal year ended June 30, 2022 compared to 37% seven years ago in fiscal year 2015, the brokerage house reported date from Pakistan Petroleum Information Service (PPIS).
The gap is anticipated to widen to 59% in current fiscal year, as demand for gas is projected at 8,160 million cubic feet per day (mmcfd) compared local production at 3,324 mmcrd in FY23. The 59% shortfall in local demand and production will mostly be met via expensive imports and load shedding at domestic, commercial and industrial zones during the year.
“Since FY15 dependency over RLNG (imported gas) has increased on an average of 90% which could go further to 3,144 mmcfd by FY25,” it warned.
Pakistan also relies significantly on imported oil. During the year (FY22), the country consumed around 236 million barrels of oil products – an increase of 119% year-on-year – owning to a decline in local oil reserves which lingered at 223 million US barrels.
