The Petroleum Division will submit a draft of new petroleum policy for upstream oil and gas companies to the Cabinet before bidding for the next blocks, sources told this correspondent. The Division is deliberating on a new petroleum policy with incentives for foreign exploration and production (E&P) companies and the draft of new policy would be submitted to the Cabinet by August 2019, sources added.
Petroleum Division has identified as many as 40 new blocks but the bidding of these blocks will be held after road-shows some time in the third quarter of the current year. The government allotted 10 licences to E&P companies after holding competitive bidding on November 26, 2018 however no foreign company participated in the bidding process. During the five-year tenure of Pakistan Muslim League-N, no license was issued as the government had focused on import of LNG.
Dr Qamar Javaid Sharif, the newly-appointed board chairman of the Oil and Gas Development Company Limited (OGDCL) told Business Recorder that the company's current success ratio is 1:3, defined as for every three wells that are dug one rig pays off.
"Internationally, the ratio is 1:10. So even if we end up in the neighbourhood of 1:5, we are still good to go", he said. The draft of new E&P policy is expected to have seven major amendments and the three major amendments are as follows.
First, under the standard operating procedures (SOPs), the E&P companies had to get permission at very development phase but it has been decided to change the current regime to informatory regime. Thus under the new regime, exploration and production companies will inform and not seek permission.
Second, exploration and production activities will be offered more incentives. The official clarified that in the past when more than 60 percent oil and gas was recovered from a well, then most companies abandoned the well arguing that more technology and investment was required to extract the remaining 40 percent oil and gas, however the government has decided to provide more incentives to enable E&P companies to exploit the full potential of recovery of oil and gas.
Third, the draft of new petroleum policy will also address security concerns of the E&P companies working in various parts of the country and set up a task force for the purpose.
Overall imports of petroleum and products witnessed an increase of 4.01 percent during the first ten months of the current fiscal year 2018-19 as compared to the corresponding period of the last year. During the period under review, total imports of the petroleum and products stood at $11.89 billion, as against imports of $11.44 billion in 2017-18, according to the latest data issued by the Pakistan Bureau of Statistics (PBS). Five local refineries are producing only 12 million tons per annum of petroleum products against the current demand of over 25 million tons per annum.