$175 million bids received for 41 blocks

The government on Wednesday received competitive bids for 41 blocks against bids for 53 blocks in all the four provinces. However, investors have not shown any interest in 12 blocks located in Balochistan due to poor law and order situation. Total value of the bids received for the minimum work programme is $175 million for three-year period and actual expenditures against minimum commitments would be easily over $500 million, said special secretary G A Sabri in a press conference here.
He said that implementation would be in two phases and Federal Minister for Petroleum and Natural Resources Naveed Qamar had directed to give provisional approval in one week, which normally takes one month. In the second phase, the contracts will be signed in one to three months, he said, adding that OGDC, PPL, ENI, BP and many other companies had succeeded in the bids.
He said that the government succeeded in attracting interest of investors for 41 blocks due to price and fiscal incentives announced in Petroleum Policy 2009. "Government will soon announce incentive package for the investors to be offered for the blocks located in Balochistan," he said, and added that the government had offered the blocks located in Balochistan due to community development programme and sharing the new petroleum policy with the people of Balochistan.
He said that the government had succeeded in starting work on 16 blocks in Balochistan after negotiation with Balochistan government, out of 25 blocks, on which the work was pending for a long period. He hoped that the work would start on remaining blocks after the initiation of confidence building measures in shape of package announced by government.
Out of 41 blocks, some blocks are located in Balochistan, he said, hoping that new companies would work in joint venture with the companies that have succeeded in securing contracts. He said that two blocks in Balochistan were in force majeure area and there was no block included in this category. Out of 41 blocks, 25 wells are located in Sindh, 5 in Balochistan.
"Industry was not comfortable with Petroleum Policy 2007 and therefore government has opened bids after two and half years," he said, and added: "I can safely say that government spent $0.5 million on consultants to form Petroleum Policy 2007."
He said that Petroleum Policy 2009 is domestic and no consultant was hired. He said that work had been initiated on offshore drilling in 2004 by Total and 2006 by Shell and the country is expected to have offshore well in 2010 by ENI exploration company. "As many as 14-15 active licences exist for offshore drilling at present, he said. He noted that the government had set the target of drilling 80 wells during the current financial year whereas 8 wells had been drilled during the first quarter.
Meanwhile, according to a statement issued here, in pursuance of the new Petroleum Policy 2009 launched by this government in 2009, the Ministry of Petroleum and Natural Resources had invited applications for grant of exploration licences for 53 blocks. Bids were received for 41 blocks which were opened publicly by the Directorate General of Petroleum Concessions in the presence of the prospective bidders.
In almost half of the blocks, bidding was very competitive and aggressive. It is for the first time that bids were invited for such a large number of blocks which showed the confidence of the industry in the new Petroleum Policy of the government. Total value of the bids for the minimum work programme received is $175 million.
The actual expenditure against the said minimum commitment would easily be of over $500 million during the exploration phase only. Under the prevalent energy crises, the government places high priority on oil and gas exploration and production, therefore it has provided liberal incentives to the investors for getting benefit of their expertise and modern technology for expeditious development of the Exploration and Production sector in Pakistan.