ISLAMABAD: Pakistan is set to offer a dozen offshore blocks for oil and gas exploration in August 2024, aiming to attract international investors; boost the country’s energy sector; and reduce reliance on imported energy.
The government plans to offer two dozen blocks in two phases, each dozen in 2024 and 2025. These blocks, located in the Arabian Sea, range in size from 1,000 to 3,000sq kilometres. The initiative is expected to significantly enhance domestic energy production and decrease dependence on imported energy resources.
The offshore blocks are divided into several zones based on geological and geophysical characteristics. The Ministry of Energy highlighted the potential for significant hydrocarbon discoveries, citing recent technological advancements in deep-sea drilling.
“We are offering competitive fiscal terms and a transparent bidding process to ensure that Pakistan becomes a prime destination for global oil and gas companies,” a top official said. The blocks will be offered with attractive fiscal and regulatory policies for petroleum investors. These include a sliding scale production sharing arrangement; protection under foreign investment laws; government guarantees for gas purchases; and the right to remit funds. Additional incentives feature payments in dollars; a 5.0 per cent tax on equipment; transferable work units; and the option to sell to third parties. Royalties are treated as tax expenses, and there are separate policies for tight gas, with rates up to $12.6/MMBTU.
Pakistan’s offshore exploration success has been elusive, with the most recent high-profile effort being Eni’s 2019 Kekra ultra-deepwater wildcat, which targeted multi-trillion cubic feet of gas reserves but proved unsuccessful.
The bidding process for 12 blocks is likely to begin in August 2024, with interested companies required to submit their proposals by the end of November. The government has assured potential investors of support in obtaining necessary licences and navigating regulatory requirements.
According to documents available with The News, the 2024 bid round will include six shallow-water blocks in water depths of less than 200 metres, two deepwater blocks (200 to 1,000 meters), and four ultra-deepwater blocks (more than 1,000 meters).
The six shallow-water exploration licences to be offered are Zarrar (Block 2267-3), Kochi Creek (2366-8), BEHR (2366-9), Keti Bandar (2367-6), Gharo Creek (2466-9), and Bin Qasim South (2466-10). The last two tracts have seen historic drilling, with the Indus Marine-1B exploration well drilled on Gharo Creek and Karachi South-1A and Korangi Creek-01 probes targeting Bin Qasim South.
The two deepwater blocks in the 2024 bid round are designated Offshore Deep-A (2266-14) and Offshore Deep-B (2266-10).The four ultra-deepwater blocks include Offshore Ultra Deep-A (2266-12), Offshore Ultra Deep-B (2266-13), Offshore Ultra Deep-F (2465-6), and Offshore Ultra Deep-J (2365-5).These tracts, all located in the Indus Offshore basin, range in size from 834 to nearly 2,500sq kilometres.
This initiative is part of Pakistan’s broader strategy to harness its untapped natural resources and achieve energy self-sufficiency. With the global energy market facing volatility, the government is keen to explore all avenues to secure a stable energy supply for its growing economy.
The Offshore Indus has the world’s second-largest delta fan system, with a sediment thickness of up to 10 kilometers. It is analogous to other hydrocarbon-bearing deltas, such as Mahakam in Indonesia. The Indus is expected to be gas-prone, although there is a possibility of an oil play on the eastern periphery of the basin. The estimated resource potential is between 10 trillion and 40 trillion cubic feet of gas.
So far, 14 wells have been drilled in the Offshore Indus, including 11 in shallow water and three in ultra-deep water. Six wells targeted Paleogene/cretaceous plays, six targeted Miocene clastic plays, and two targeted carbonate buildups (deep water). The only success, still far from commercial, was the OGDC’s PakCan 1985 wildcat, which flowed at 3.7 million cubic feet per day of gas (mostly methane) from Miocene clastic sands.