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Prospect of oil and gas in Pakistan.

Oil Prospects

Oil for, the time being remains the most important fuel for our country. Discoveries of new oil fields in different parts of the country have raised the local production of oil to 60,000 barrels per day (BPD) of our minimum daily requirements. Pakistan has vast potential of oil and gas. International consultants Acres of Canada estimated oil reserve potential at 1409 billion barrels, proved oil reserves at 300 million barrels, gas reserve potential at 140 trillion-cubic feet and proved gas reserves at 24 trillion cubic feet. Another international consultants ISP estimated at 53 billion barrels, 300 Million barrels, 143 trillion cubic feet and 24 trillion cubic feet respectively.

With the discoveries made in Pothohar and Sindh, Pakistan will be able to save Rs. 500 million in foreign exchange. Pakistan could not make any breakthrough in oil due to lack of modern technology. The government is determined to achieve autarky in oil and gas. At present 12 foreign and four local companies along with OGDC are drilling for oil. Consequently so far 210 exploration wells have been drilled. OGDC has planned to drill 165 new wells including 100 development wells at cost of Rs. 15.768 billion during the Seventh Five Year Plan. The production target by 1993 was set at 36.58 million barrels of oil 268,669 MCF of gas.

Since its inception in 1961, the OGDC has drilled 169 wells comprising three geological information brings and it has made 20 discoveries comprising nine oilfields, three gas and condensate fields and eight gas fields. Of these, 13 fields were discovered during the Sixth Five-Year Plan period. As a result of intensive exploration programme by OGDC, the daily production capability of oil from the wells drilled by the Corporation has reached to about 13,4500 barrels a day out of total national production of about 48,000 barrels.

OGDC have fixed a target for the drilling of 35 wells during the year 1988-89. Against this, OGDC has already drilled 16 wells during the first six months of the year. Now with the discovery of gas in Sindh and Punjab, government may step up such efforts in NWFP and Balochistan. Presently, government is spending around $ 1 billion for import of oil to meet its local demand. The new oil discoveries will surely save Pakistan a sizeable amount of foreign exchange, which could be used for some other important uplift projects. Considering the present pace of work being carried out, there is every reason to believe that Pakistan will become self-sufficient in energy pretty soon.

Demand of Energy

Demand of energy for domestic as well as development requirements in the country has increased at a faster rate in recent years and during the Sixth-Plan period, commercial and non-commercial energy delivered (energy received by consumers after purification and transmission losses) recorded an annual compound growth rate of 6.6 per cent. Sub-section-wise growth was 5.1 per ;cent in domestic, (.4 per cent in industrial, 3.9 per cent in commercial, 19.9 per cent in agriculture 2.4 per cent in transportation, according to an official report.

In absolute terms, energy consumption has increased from 12.76 million in 1982-83 to 18.60 million etc. (excluding power sector) in 1987-88. Industrial sector had the major share in energy consumption at 35 per cent. The main sources of the country's energy supply include oil, natural gas, coal hydel power, nuclear power and liquefied petroleum gas. The most important sources of domestic energy are gas and hydro-power.

At present there are eight gas fields with estimated recoverable reserves of 652 billion cubic metres. Hydro-power is obtained from Tarbela, Mangla and Warsak dams, having an installed capacity of 1750 m 800 mw and 43mw respectively. The report said that the hydel ranking study for major hydroelectric projects financed by the Canadian International Development Agency (CIDA) has indicated Basha 4500 mw, Dasu 5500 mw, and Thakot 2400 mw located upstream of Tarbela on the Idnus as the most prospective sites for future development. Small hydropower projects in the Northern Areas, here feasible, have also been undertaken.

The biggest share in energy supply is accounted for by oil 41.2 per cent followed by gas 34.3 per cent. During 1987-88, the share of oil in the country's total energy supply was 41.16 per cent and average daily extraction was 44,684 barrels per day which increased to 51,086 barrels per day in March 1989. The share of domestic production in total crude oil supplies has of late increased from about 35 per cent in 1986-87 to 37 per cent in 1987-88. This has been made possible by the discovery of new oil fields.

The government's package of incentives has announced a new producer pricing formula which has attracted a number of foreign oil companies for investment in hydrocarbon exploration. Fourteen oil exploration companies including Oil and Gas Development Corporation (OGDC) in the public sector were operating during July-March 1988-89 against the target of 19 wells for 1988-89 OGDC and the private sector drilled 13 exploratory wells, four by the OGDC and nine by the private sector up to end March 1989.

Between July 1988 and March 1989< a total of 24 appraisal development wells were drilled -- 18 by OGDC and six in the private sector against the target of 36 wells for 1988-89. During the period under review, one oil field, North Akri (UTP), one gas field Bagla (Philips) and one gas condensate field Daru (OGDC) were discovered. The report said the recoverable reserves of natural gas from the dry gas fields and associated gases from the oilfields are estimated at 651.564 billion cubic metres as on April 1, 1989.

ProductioN of natural gas during 1987-88 was 12,358 million cubic metres. During the first nine months of 1988-89 production was 9,436 million cubic metres and against 9,191 million cubic metres during same period of last year showing an increase of 2.7 per cent. Total consumption of natural gas during 1987-88 was 10,913 million cubic metres.

Exploration Agreements

Trinity Petroleum Company of USA

The Government of Pakistan has signed an agreement with Trinity Petroleum Company of USA for Petroleum exploration at Kohlu Block. The Kohlu Block, consists of 1735 sq. kilometres, located in district Rajanpur, and tribal areas of Sulaiman Range in the Punjab and Loralai, Kohlu and Dera Bugti in Balochistan. The US company will carry out surfaced geological studies, acquisition and integration of satellite imagery with surface geology, geo-chemical, studies, seismic modelling. The Company will acquire a minimum of 250 kilometres of seismic data and drill one mandatory well and spend a minimum amount of 4.6 million US dollars during the initial three years period.

In the subsequent years, the company would drill three exploratory wells in three years time. The company according to the agreement, would have three renewals of one year each after the expiry of first three years of agreement. The Oil and Gas Development Corporation (OGDC) will also be associated in the job. The Trinity Petroleum is a wholly owned subsidiary of Anchutz Corporation of Denver, Colorado, USA and is presently engaged in petroleum exploration and development in USA, Canada, Italy Indonesia, Paraguay, and Bolivia.

Occidental of Pakistan Inc. (OXY)

An assignment agreement was signed on October 1, 1989 between the Government of Pakistan Occidental of Pakistan Inc. (OXY), Pakistan Oilfields Limited (POL), Attock Oil Company Limited (AOC) and Oil and Gas Development Corporation (OGDC) according to which Oxy has assigned 13.3 per cent and 5.7 per cent working interest to POL and AOC respectively, out of its 95 per cent working interest in the Soan block which was granted to it in June 1988.

Oxy has already made a discovery at Bhangali-1 in this connection and discovered oil at a rate of 3000 bpd with associated gas of 7 MFCD. The company plans to put this well on extended production test to obtain pressure and other data. After commercial discovery POL and AOC will have seven per cent and three per cent interest respectively.

Two oil fields and one gas field have been discovered in the last two months. These are: Kandanwari Gasfield in Khairpur District, Pasahki Oilfield near Hyderabad and Bhangali Oilfield near Rawalpindi.

Agreement with AMOCO

Two concession agreements were signed between the government of Pakistan, AMOCO Pakistan Exploration Company (AMOCO) (a subsidiary of AMOCO production company of the USA) ND Oil and Gas Development Corporation (OGDC) for petroleum exploration over Sibi (districts Katohi, Sibi and Kalat) and Kohat (Khurram Agency, North Waziristan, South Waziristan districts, Bannu, Kohat and D.I. Khan) areas covering 7250 sq.km. and 7500 sq.km. respectively.

In addition, a reconnaissance permit was also granted over an area of 254,340 sq.km. covering parts of the four provinces to AMOCO Pakistan Exploration Company under which the company would carry out reconnaissance work in the area including geological, and gravity surveys. The data acquired under this permit would be handed over to government of Pakistan, six months after the completion of the surveys.

Under the concession agreements, the companies will carry out 1200 sq.km. of seismic survey and drill two exploratory wells in Sibi and Kohat blocks. The companies would spend around US $ 19.5 million in these blocks and the reconnaissance area during the initial period.

AMOCO is a company of international repute and was involved in petroleum exploration in Pakistan during the period 1969 to 1981. During this period AMOCO acquired digital seismic data, drilled 10 exploratory wells and spent over US $ 90 million.

Assignment Accord Signed

An assignment agreement was signed between the Government of Pakistan, Occidental of Pakistan Inc, Pakistan Oil Fields Limited, Attack Oil Company Limited and Oil and Gas Development Corporation

According to the agreement OXY has assigned 5.7 per cent and 3.8 per cent working interest to POL and AOC respectively in the offshore Indus delta block which was granted to OXY and OGDC joint venture in 1988. OXY is currently drilling an exploration well, Sadaf-I, in this block. The well was spudded on December 22, 1989 and is currently drilling below 6,700 feet

Oil Discoveries

Kandanwari Gasfield

The gasfield has been discovered by the joint efforts of Lasmo Oil Pakistan Limited (Lasmo), Oil & Gas Development Corporation (OGDC), Kuwait Foreign Petroleum Exploration Corporation (Kufpec) and Idemitsu Oil Development Company (Idemitsu). Kandanwari is the first exploratory well drilled by the joint venture group in Tajjal block. The Tajjal concession was granted in July 1987 covering an area of 5,000 square kms in Khairpur, Sukkur and Nawabshan district.

Oil at Pasahki in Sindh

The Oil and Gas Development Corporation has struck oil at Pasahki, 16 kilometres from Hyderabad, yielding 2,600 barrels of oil per day. Being close to the road, the discovery could be pumped into the oil mainstream within two months.

Fimkassar

Oil and Gas Development Corporation has made another oil discovery during the current month at Fimkasar, about 80 kilometres south of Islamabad in District Chakwal, bringing the total production of the country up to 60,000 barrels a day. The discovery was 100 per cent owned by OGDC.

There is good potential of oil at Fimkasar, some six to seven more wells would be drilled at this site which was abandoned by the famous Us-based Gulf Oil Company in 1980-81 to the total depth of 3,485 metres. The company wound up its operation in Pakistan and assigned the area to OGDC. "The Gulf Oil Company found the Chotgali Sakesar formation too tight for a commercial discovery.

The oil was of good quality and had a gravity of about 40 degrees api. It could be refined in the nearby Attock Oil Refinery located at Rawalpindi. Because of low amount of gas the well could be put on extended production testing soon after completion as flaring one million cubic feet of gas did not present a serious problem.

Bhangali Near Rawalpindi

The Occidental of Pakistan and the OGDC joint venture has struck oil in commercial quantity in Bhangali in Rawalpindi District, 35 miles south of the federal capital. The preliminary reports indicated oil flow at the rate of 3,000 barrels per day. Tests also revealed availability of over four million cubic feet of gas per day along with oil.

The relatively low gas, oil ratio (GOR) of 1,341 to one indicated that the discovery was of primarily oil reservoirs. The oil discovered had the gravity of 32 API, considered to be good quality light oil, which was most suitable for refineries, according laboratory result tests. The experts said that the oil jet was gushing out at a pressure of 3,920 pounds per square inch which reflected that he actual output from the well could be much more than preliminary estimates. The size of the structure was also large and was comparable with that of Dhurnal capable of holding large quantities of oil. In view of the large size of the structure, the daily oil production from Bhangali may actually be much more depending upon the number or wells. At present only one well has been sunk. OGDC is the major shareholder in Bhangali prospecting area holding 50 per cent share in the event of commercial discovery. Other shareholders are occidental 40 per cent, Pakistan oil fields seven per cent and Attock Oils 3 per cent. Drilling operations have, however, been entrusted to Occidental, who are are also the operators of the oil field. Further tests are continuing to determine the exact size of reservoir and daily output.

New Oil & Gas Field

A new oil and gas field has been discovered at Bhal Syedan located 52 kilometers southwest of Islamabad and six kilometers west of FAtehjang in Attock district. The new field would produce 1,000 barrels per day, after coming into production, within a period of 10 to 11 months. The structure of the new well is fairly large in size and estimation of reserve will be done after testing all the zones in this well and drilling some appraisal wells. The proximity of the existing gas transmission line will facilitate early development of the field and save the cost of development.

Oil Discovery at Daru

A new oil and gas discovery has been made by Oil and Gas Development Corporation at Daru, in Hyderabad District, from where a production of 430 barrels of condensate and 8.8 million cubic feet of gas per day is being achieved. This was stated by Federal Minister for Petroleum and Natural Resources, Mr. Jehangir Badar, while addressing a Press conference.

Two oil fields have been further developed from where a total production of 3,542 barrels of oil and 4.25 million cubic feet of gas is expected to be achieved shortly. The two fields which have been further developed are Thora (the new expansion to be called as Thora East) and Kunar (the new expansion to be called as Kunar 1-A).

Daru field is located about 22 kilometres, south-east of Hyderabad town and falls in Sanghar concession of OGDC. The sub-surface structure of this field is spread over an area of about 8.5 square kilometres and the seismic surveys were carried out during 1987-88. Daru were No. 1 was spudded in on Oct 12, 1988, and after completion of drilling to the target depth of 2563 metres, and production testing was started on Jan 1, 1989

The expansion of Thora oilfield has been completed and during testing on half-inch choke, the output of condensate was recorded as 2,160 barrels per day. Similarly, from Kunar 1-A, 1-382 barrels of condensate and 4.25 million cubic feet of gas per day will be produced.

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Title Annotation:Cover Story
Author:Haidari, Iqbal
Publication:Economic Review
Date:Feb 1, 1990
Words:2622
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