Mari Petroleum set to launch international operations

Mari Petroleum Company Limited (MPCL) is set to launch international operations in collaboration with international oil & gas exploration companies, Lieutenant General Nadeem Ahmed (r), Managing Director MPCL said. Talking to Business Recorder on Tuesday, MD MPCL said the company within the past one year has increased local gas production by 61 Million Cubic Feet per Day (mmcfd) taking it from 584 mmcfd in 2013 to 645 mmcfd in 2014.
He said MPCL is looking to work in Central Asian countries in collaboration with Hungarian oil/gas exploration/production company MOL and Malaysian Petronas on joint venture basis. He said MPCL has started Pakistan's first-ever commercial production of tight gas from Zarghun South Gas Field, adding that gas supply from Zarghun gas field is dedicated to Quetta. The Zarghun gas field will add up to 20 million cubic feet of gas per day into the system and it is the first-ever gas field from where gas production is dedicated to a certain city or area.
He said the government in principle has agreed with the company for the replacement of existing Gas Sales Purchase Agreement (GSPA) based on cost plus formula. Currently, MPCL is getting $0.78 for producing one mmbtu of gas from Mari Gas Field while other companies are receiving up to $6 for similar production. "Our success ratio in 2013-14 was 100 percent as MPCL drilled five oil/gas wells and all were successful and as a result the company's oil/gas production significantly increased. A few months ago MPCL share prices were trading at around Rs 174 per share, which now is trading at Rs 560 per share. We discovered crude oil on Ghori Block. Crude oil production in Haleem Block district Karak has jumped from 550 barrels per day to 1,100 barrels per day," he added.
The MD stated that the company is extensively working in the exploration of oil and gas sector and in 2012-13 contributed Rs 65 billion to the national kitty, which in 2013-14 reached Rs 76 billion mark. MPCL declared highest-ever dividend of 38.65 percent in 2013-14 against 37.84 percent in the 2012-13 and reached highest-ever share price of Rs 560. "Our crude oil/condensate production also touched new heights over the period as it went up to 199,000 barrels against 191,000 in 2012-13," he added.
MD MPCL said in spite of financial constraints MPCL drilled 6 exploration/appraisal wells - the highest number of exploration/appraisal wells drilled by the company in a year. MPCL spent $40 million on exploration and development activities against an allocation of $32.5 for the year. He added that the company has commenced production on nine oil/gas wells adding that overall the company's efforts saved $3.2 billion foreign exchange for the country.
"In Mari field we are sitting on the second largest oil and gas reservoirs of the country, but due to financial constraints we remain unable to undertake drilling of multiple wells at a time because federal government allocates us nearly $20 million for exploration purposes. With this amount only one oil/gas well can be drilled. On our regular request this year the federal government has increased allocation for exploration activities from $20 million per year to $37 million per year," Nadeem Ahmed added.
The government in principle has decided to replace current Gas Sales Purchase Agreement (GSPA) which is based on cost plus formula with Mari Petroleum Company Limited (MPCL) in a bid to bring the company at par with other exploration and production companies operating in the upstream oil/gas sector of the country.
He said the company has plans to increase spending on exploration and production activities from current $40 million per year to $120-$128 million per year during next few years. To speed up the exploration and development activities, MPCL recently purchased a modern rig costing $20 million from China and it will be used in exploring oil/gas in Karak area of Khyber Pakhtunkhawa.
MPCL's success ratio is 1:1.4 which is high compared to other E&P companies with an average of 1:4; internationally the ratio is 1:8. About 78 percent of MPCL's gas production is dedicated to fertiliser plants and the company is playing a very critical role in the growth of the agriculture sector. MPCL is supplying 12 percent of its gas to power houses while the rest is being supplied to other sectors. MPCL is supplying gas at $0.78 Per Million British Thermal Unit (mmbtu) - lower than the price charged by other public sector and private E&P companies. Currently, MPCL is working in 17 oil/gas blocks of which 11 blocks are entirely being explored by MPCL while in other 6 blocks MPCL is a joint partner.