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Express Tribune
4 days ago
- Business
- Express Tribune
Govt targets offshore drilling with new partners
Listen to article Pakistan has decided to again try its luck in offshore drilling by forging new partnerships with countries like Turkiye and Russia. Earlier, domestic companies including Oil and Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PPL) struggled to find hydrocarbon reserves in an offshore zone in Arabian Sea in association with US energy giant ExxonMobil and Italian firm Eni. Pakistan has made 17 attempts to make offshore drilling but they did not yield desired results. They drilled the Kekra-1 offshore well during tenure of the previous Pakistan Tehreek-e-Insaf (PTI) government. But those efforts did not bring success. The Kekra-1 offshore well is located approximately 280 kilometres off Karachi coast. Sources told The Express Tribune that the Petroleum Division was seeking bids from interested investors to grant rights for drilling an offshore well and it would open the bids on October 31, 2025. Petroleum Minister Ali Pervaiz Malik and OGDCL Managing Director Ahmed Hayat Lak are also looking to bring some new partners to Pakistan for offshore drilling. They visited Russia recently and invited its companies to pump investment into Pakistan's offshore drilling sector and participate in the upcoming bidding round. OGDCL has already formed a joint venture with a Turkish firm for submitting an offer for offshore drilling. In this case, bids are scheduled to be opened on October 13. Sources said that Russian firms were also likely to enter into a joint venture with OGDCL through bidding for an offshore block. Earlier, Pakistani firms had a joint venture with Italian and US firms. "This time around, Islamabad is going to try its luck in offshore drilling with new partners," an official remarked. In February 2025, the government announced an offshore block bidding round, offering 40 blocks in Makran and Indus basins for exploration licences. This is a significant opportunity that could attract foreign direct investment (FDI) in the upstream energy sector. Pakistani exploration and production (E&P) companies – Mari Energies, OGDCL and PPL — have signed a joint bidding agreement with Turkish state-owned firm Turkiye Petrolleri Anonim Ortakligi. Under this deal, they will participate in the offshore bidding round. Pakistan believes that this strategic collaboration will bring much-needed FDI and pave the way for deployment of international technologies, expertise and skills to explore the untapped potential of the country's offshore region. Previously, an offshore drilling venture was formed with US energy major ExxonMobil following a nine-year hiatus. However, it turned out to be unsuccessful, with allegations of lack of commitment against ExxonMobil. ExxonMobil was also said to have placed a request for a larger exploration area in Karachi's seawaters, but security concerns prevented the government from accepting the request. Now, the Shehbaz Sharif-led government is striving to accelerate oil and gas exploration activities in the country. Circular debt is a key challenge, with growing calls from E&P firms to resolve this issue. They argue that the circular debt has squeezed their cash flow, restricting them from injecting money into new projects. At present, the gas sector is facing a circular debt of Rs2.8 trillion and the Petroleum Division is making efforts to settle these liabilities. Separately, liquefied natural gas (LNG) supply contracts with Qatar have led to a decrease in indigenous gas supply, compounding financial problems for energy firms. Tax and advisory services provider KPMG, hired by the Petroleum Division, has drawn up proposals to tackle the circular debt problem. It has recommended the government to impose a special levy in the range of Rs3 to Rs10 in line with the power sector model, where debt servicing surcharge has been included in consumer bills. The special levy will help raise funds for debt servicing through bank loans, which will be gradually retired over six to seven years. Additionally, the advisory firm has proposed an increase in gas prices and a gradual end to the cross-subsidy of Rs160 billion by January 2027.
Business Recorder
21-05-2025
- Business
- Business Recorder
‘Discrepancies in OGDCL real-time data': Concerns mount about accuracy of royalty payments to provinces
ISLAMABAD: Concerns about the accuracy of royalty payments to provinces are mounting due to discrepancies in the Oil and Gas Development Limited (OGDCL)'s real-time production and sales data. This issue is exacerbated by the absence of a verification mechanism within the Petroleum Division, potentially allowing the company to benefit from unaudited data. This was revealed in the Public Accounts Committee (PAC)'s sub-committee meeting which examined the Ministry of Energy (Petroleum Division) Audit Report 2010 and 2013-14. Seven new exploration blocks: OGDCL secures provisional award In one case, audit identified short payment of royalty of Rs467.47 million due to difference to quantity of oil produced, saved and sold (refined product sale). Audit highlighted that there was variation in figures of raw production available with Director General (PC) Petroleum Division and figures of sales actually declared by the OGDCL for payment of royalty. Further, the DG (PC) has not record of crude oil and gas actually sold and no mechanism in place to authenticate the figures of production and sale of crude oil and gas. The PAC has directed the ministry to 'ensure the collection of royalty on value of oil and gas actually saved (refined products) as required under the law instead of on value of oil and gas sold'. The audit official pointed out huge difference between crude oil supplied and sold by OGDCL. Moreover, field production of crude oil is reported after considering the basis sediment and water drainage, so the treatment of the same at the refinery is not justifiable. The auditor observed in the audit para that DG PC did not take notice of difference between petroleum products produced and saved and sold by OGDCL. Due to this difference of 373,977 barrels OGDCL evading royalty, the government was deprived of revenue worth Rs467.47 million approximately. According to the Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948, read with Rule 36 of Pakistan Petroleum (Exploration and Production) Rules, 1986, holders of a lease shall pay a royalty at the rate of 12.5 percent of the wellhead value of the petroleum produced and save. OGDCL Managing Director Ahmed Hayat Lak asked the audit to read out Rule 37 and Rule 36 of Pakistan Petroleum (Exploration and Production) Rules, 1986, which provide clarification in the matter. The audit official rejected the argument of the OGDCL management which says, 'Quantity of dispatch was taken out of which certain quantities had to be deducted and reconciliation was produced. The reduction in quantity due to drainage of water losses/conversion factor requires more supporting documents for verification of facts'. Acting DG (PC) Kashif Ali explained that main difference is due to the various factors such as production is always reconciled with the receipt of refinery at temperature and transport losses. On other hand, Petroleum Division has yet to implement its concession management system which was installed in 2009. In the office of DG (PC), concession management system remained dormant and was not helpful in systematic provision of data. 'Millions of rupees were spent for development of the software but the purpose was not being served i.e. to compile the record in the systematic manner,' the audit official said. This system was devised to keep information and record updated regarding each E&P Company relating to its activities and other obligations. Secretary Petroleum Momin Agha and DG (PC) explained that they again hired the services of contractor LMKR in January 2025 to manage petroleum concession agreement, petroleum sharing agreement, license and lease deed, information relating to operator, status/payable of royalty, rent production bonus, training funds and other obligation. Audit official stated no progress on implementation has been seen in last four months following signing of the contract. Copyright Business Recorder, 2025
Zawya
09-04-2025
- Business
- Zawya
Pakistani consortium to start production in ADNOC's offshore Block-5 by 2027
Pakistan's Oil and Gas Development Company Limited expects to start production in Abu Dhabi's Offshore Block-5 by 2027, while also increasing domestic oil and gas output and diversifying into minerals, its CEO said on Wednesday. OGDCL partnered with Abu Dhabi National Oil Company (ADNOC) in 2021 to explore and develop oil and gas resources in the block. Ahmed Hayat Lak, managing director and CEO of OGDCL, told Reuters the reserves were still being evaluated, but the company believed production could start in 2027. In terms of local exploration and production, Lak said the company was targeting crossing 50,000 barrels per day in oil production, up from 37,000, and gas output reaching 1 billion cubic feet, from around 800 million cubic feet, in the next three years. "We have developed a short-term, medium-term and long-term strategy or business plan for investing in tight gas," said Lak, following improved pricing by the government. Lak, speaking on the sidelines of the Pakistan Minerals Investment Forum 2025, also said the company planned on diversifying its operations. OGDCL has an 8.3% stake in Pakistan's copper gold mine Reko Diq. "We have decided, as part of the business strategy that we will diversify into the mineral sector, and as a result, yesterday we agreed to partner with Barrick Gold in other exploration licences too," said Lak. Lak called the company's stake in the Reko Diq copper-gold project a "game changer". He said lithium exploration was also on the cards and would be one of the company's priorities. (Reporting by Ariba Shahid in Karachi; Editing by Alison Williams)
Express Tribune
07-04-2025
- Business
- Express Tribune
Pakistan to display mining potential
Pakistan will showcase its metals and minerals potential to local and international investors during the two-day Pakistan Minerals Investment Forum 2025, beginning today (Tuesday) in Islamabad. Representatives from major economies and companies, including the US, UK, China, Saudi Arabia, Turkey, Denmark, Azerbaijan, Finland, and Kenya, will attend the forum, Minister for Petroleum Ali Pervaiz Malik and Oil and Gas Development Company Limited (OGDCL) MD Ahmed Hayat Lak said at a joint pre-event press conference on Monday. "The sector's [mining] contribution to Pakistan's GDP is less than 8%, but the indicated potential is not reflected in our economy. We are moving towards corporatisation of the mining sector," the minister said. "Minerals are a provincial matter. International stakeholders often struggle to identify the right contact point due to our six policies, eight acts, and 36 rule versions," he added. Efforts are underway to implement a unified framework, which some provinces have approved at the cabinet level, while others have passed legislation. The framework, based on global best practices from countries like Indonesia and Australia, was drafted with help from White & Case and reviewed by Wood Mackenzie. "We are also auctioning nearby blocks and revitalising the Geological Survey of Pakistan. Bidding is underway to encourage exploration, and we're pursuing partnerships with international firms," the minister said. The OGDCL MD said the company is fully involved in the Reko Diq project, along with Pakistan Petroleum Limited (PPL) and Government Holdings (Private) Limited (GHPL). He noted that the focus is now "Beyond Reko Diq," with new discovery announcements and agreements expected.
