Pakistan''s crude oil production has dropped to 64,900 barrels per day in the FY10, which is it''s lowest in the last six years, Business Recorder learnt Friday. The drop is an alarming one as there has been a constant rise of 8 to 10 percent in the demand of oil annually, analysts said. "The declining oil production in the country could pose serious concerns on the overall country''s balance of payments because dependence on imported hydrocarbons would increase", they said.
The oil production of the country has dropped by one percent in the FY10 as compared to the previous fiscal year, however the gas production in the country increased slightly by 2 percent on a year-on-year basis at 4.1 bcf (billion cubic feet), they also said.
Pakistan Oilfields Limited (POL) was the major listed E&P sector company which showed improvements in both - oil and gas productions during the FY10, thanks to an additional production from the Tal block, analysts said. Farhan Mahmood, an analyst of the Topline Securities said the dependence on imported hydrocarbons would further increase as the work on some major projects has stopped as they have been in litigation for the last 2 to 3 years. These projects are: the UCH-II development plan (160 mmcfd gas), the Sinjhoro project (31 mmcfd) and the Tando Allah Yar project (278 mmcfd).
Currently, Pakistan meet its entire gas needs through their indigenous gas production, whereas the local crude oil contributes only 15 percent to the country''s needs, he added. Oil and Gas Development Company Limited (OGDCL), which produces 59 percent of the country''s oil, saw its production drop by 6 percent to approximately 38,500 barrels per day in the FY10 as compared to 41,000 barrels per day in the FY09.
On the other hand, the oil production of both, the POL and the PPL (two major listed E&P companies) increased by 11 percent and 24 percent to 4,100 barrels per day and 48,00 barrels per day, respectively. The gas production stood at 4.1 billion cubic feet during the FY10 as compared to 4.0 billion cubic feet in the FY09, marginally up by 2 percent. Both the OGDCL and the PPL registered a drop in the production by 3 percent and 2 percent to 967 mmcfd (million cubic feet per day) and 955mmcfd respectively.
He said the drop in gas production from Qadirpur field is a major reason for the drop in OGDCL''s gas production, whereas the 5 percent drop in the production of gas from Sui remained the major factor for drop in the PPL. On the other hand, the POL, registered a 65 percent increase in its gas production from 38 mmcfd to 62 mmcfd.
He said the additional oil and gas production from Manzalai-CPF (Central Processing Facility) and Nashpa were the two big stories in the FY10. Manzalai-CPF with additional oil of 4,200 bpd and gas 250 mmcfd got active in November 2009 whereas Nashpa, one of the biggest oil discoveries in recent times, with an oil production of above 4,500 bpd started production in June 2010. "We believe the full year impact would be visible next year", said Farhan and added that the oil production from Nashpa is also expected to increase to 7,500 barrels per day in the FY11.
"We believe that oil and gas production would increase by 10 to 15 percent during the next 2 years", he said. However, the circular debt remains the key risk in the entire energy chain as 70 percent of the debt is being bourne by the local E&Ps particularly the OGDCL and the PPL, he said and added that this has already taken its toll on the drilling activities which poses a concern for the production of oil and gas.