Islamabad: On Friday, the government received five bids for offshore oil and gas exploration blocks in different high-risk areas of Balochistan. The bids came from four oil and gas exploration companies, including Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Mari Petroleum and Pakistan Oil Fields Limited (POL). These companies will invest a minimum of $22.6 million.
This is the second round of bidding conducted by the Petroleum Division to attract investment in local oil and gas exploration and production. In the first bid, licenses were awarded for 15 blocks and participating companies committed to a minimum investment of $75 million. Meanwhile, according to a statement by the Director General of Petroleum Concessions (DGPC), the Petroleum Division has publicly floated eight offshore blocks for granting petroleum exploration rights through open bidding at the Petroleum House on October 28, 2022. Bids were opened.
This was the second round of bidding this year. In this round, bids were received for five blocks, with a minimum investment of more than $22.6 million over three years by exploration and production (E&P) companies in these blocks. Apart from E&P activities, successful companies will spend more than $450,000 for social welfare in their respective block areas. In the blocks where oil is discovered, companies will invest hundreds of millions of dollars in its extraction and production.
The purpose of auctioning new oil and gas blocks is to reduce dependence on oil and gas imports by promoting and facilitating exploration in the petroleum sector. Another objective is to promote transparency to ensure a level playing field for all competitors in the E&P sector. The initiation of E&P activities will not only help in reducing the country’s import bill but will also help in creating employment opportunities. A senior government official told The Express Tribune that it was “a good response from oil and exploration companies who have committed a minimum investment of $22.6 million”.
He added that this was the second round of bidding and the government would auction another exploration block early next year to attract more investment in oil and gas production. The government official noted that this would also result in an increase in local oil and gas production. Pakistan’s domestic oil and gas production has been stable over the past decade. There was a major recovery in oil and gas production before the year 2000, when oil and gas were produced from the Kadirpur oil and gas field.
Following this recovery, previous governments introduced new petroleum policies that put a cap on gas prices that halted the recovery of oil and gas production. The PPP government introduced a new petroleum policy during its tenure and offered incentives that attracted investment in the oil and gas sector. Later, the PML-N government, upon coming to power, focused more on LNG imports and in 2015 launched a pilot project for LNG imports. Then when the PTI government came in, it focused on local oil and gas exploration.
It also facilitated the licensing process for exploration blocks. Various countries import LNG as a stopgap arrangement. On average, countries import only six percent of their total gas requirement while the rest is obtained from domestic sources. However, LNG imports in Pakistan account for 24 percent of the total gas supply. Consequently, this over-reliance on LNG imports plunged the country into crisis when Pakistan LNG Limited (PLL), a state-owned company, failed to arrange LNG cargoes on a spot basis. . PLL recently floated a tender for 12 LNG cargoes a year under a six-year LNG contract. However, none of the parties participated in the bidding process.
