Pakistan boasts extensive oil and gas resources, predominantly situated in Balochistan, Sindh, and Khyber Pakhtunkhwa, as per various studies conducted in the past. The United States Agency for International Development (USAID) study highlighted the technical recoverability of 14 billion barrels of crude oil in the Indus basin alone, indicating significant potential to meet future energy needs through increased production of crude oil and natural gas. Recent discoveries in various exploration blocks further substantiate this potential.
Pakistan boasts extensive oil and gas resources, predominantly situated in Balochistan, Sindh, and Khyber Pakhtunkhwa, as per various studies conducted in the past. The United States Agency for International Development (USAID) study highlighted the technical recoverability of 14 billion barrels of crude oil in the Indus basin alone, indicating significant potential to meet future energy needs through increased production of crude oil and natural gas. Recent discoveries in various exploration blocks further substantiate this potential.
Shah Bandar Exploration Block (Sujawal District, Sindh): Last month, Pakistan Petroleum Limited (PPL) unveiled a gas condensate discovery, yielding 13.69 MMCFD gas and 236 BPD condensate.
Mari East Block (District Rahim Yar Khan, Punjab): In September of this year, Oil & Gas Development Co Ltd (OGDCL) made a gas discovery of 1.1 MMCFD gas, marking the first discovery in Mari East Block.
Badin IV South Exploration Block (Sindh province): In September 2023, Petroleum Exploration (Pvt) Ltd (PEL) discovered gas condensate, with 16.65 MMCFD gas and 54 BPD condensate.
While these discoveries contribute to hydrocarbon reserves, they only marginally reduce the gap between energy supply and demand. The petroleum sector, crucial for the economy, heavily relies on oil and gas imports to address escalating demands driven by population growth and urbanization. Balancing energy supply-demand management becomes imperative for national security.
The total recoverable resources of crude oil and natural gas are depleting at an alarming rate. As of June 30, 2023, Pakistan had proven oil resources of 1,245 million barrels, with 84.5% already consumed. Unless new discoveries are made, the remaining 193 million barrels will be exhausted within the next five years. Similarly, of the 63.24 trillion cubic feet (TCF) of natural gas resources, 44.90 TCF have been consumed, leaving a balance of 18.34 TCF, which, at the current rate of production, will last for another fifteen years.
Unfortunately, exploration and production activities have been consistently declining in recent years, with a significant decrease in wells drilled in potential areas. There has been no meaningful discovery of crude oil and gas in more than two decades. To address this, Pakistan has initiated a comprehensive program for oil and gas exploration, exploitation, and development activities, both onshore and offshore, aiming to tap into untapped indigenous hydrocarbon resources.
In the first phase, the government revived eleven licenses of three petroleum companies that were revoked in 2019 due to a failure to undertake committed works during the 5-year licensing period of prospective Exploration Blocks. However, there is a noticeable lack of interest, domestically and internationally, in acquiring licenses for petroleum rights and exploration in Pakistan, primarily due to global economic conditions and security concerns in the region.
The government's attempt to attract interest by inviting Exploration and Production (E&P) companies for 18 prospective onshore exploration blocks in Balochistan, Sindh, and Punjab saw limited success. The government had invited, on January 27, 2023, the interested bidders for allocation of these exploration blocks but response was very poor so the last date of receiving applications was extended until June 20. These included Parkini-II Block-A, Parkini-II Block-B, Rasmalan-II, Rasmalan-II West, Khanpur-II, Khiu-II, Layyah-II, Alipur-II, Zindan-II, Sanghar-II South, Armala-II, S.W. Miano-III, Zamzama-II South, Sehwan, Thano Beg-II, Paharpur-II, Sohbatpur, and Zorgarh-II. Only three Blocks received applications, leading to the allocation of SW Miano-III and Zindan-II to state-owned OGDCL and Sehwan to private investor Prime Pakistan Ltd.
The remaining 15 Blocks were not offered for bidding again, with ten new Blocks advertised for exploration license grants. The new 10 Blocks were advertised on August 10, 2023, for the grant of an exploration license. These include Kalat North (Balochistan), Rachna-II (Punjab), Malir-II (Sindh), Saruna West (Balochistan), Kotra East (Balochistan), Murradi (Sindh), Sawan South (Sindh), Mithiani (Sindh), Gambat-II (Sindh), and Zamzama West (Sindh). The last date for receiving the applications, which was extended a number of times, was November 30, 2023. Bids have opened. The response as expected has been lukewarm. There have been no bids received for four Blocks namely Kalat North, Rachna-II, Malir-II, and Zamzama West. Bids for the remaining six Blocks are from E&P companies already operating in Pakistan. The government has thus awarded these Blocks provisionally to United Energy Pakistan (two Blocks), OGDCL (two Blocks), joint venture of OGDCL and Pakistan Petroleum Ltd-PPL (one Block), and joint venture of Pakistan Oilfields Ltd (POL) with OGDCL and PPL (one Block).
Efforts to exploit and develop non-conventional resources of natural gas from shale and tight rocks are underway, albeit with limited success. Studies on shale and tight gas report a potential of 3,778 TCF gas in place and technically recoverable 95 TCF gas, along with 2,323 billion barrels of oil in place and technically recoverable 58 billion barrels of oil. However, developing shale gas poses challenges due to complex geography and geology, water resource limitations, security concerns, and environmental constraints.
Pakistan possesses a substantial offshore basin with significant potential for hydrocarbon discoveries; however, it remains largely unexplored to date. While a dozen test wells have been drilled in the Indus Offshore Basin, no commercial discoveries have been realized. In the initial phase, 12 Offshore Blocks were offered in June 2023 for the granting of Exploration and Production (E&P) rights. These include six in shallow waters (less than 200m), two in deep waters (200m to 1,000m), and four in ultra-deep waters (more than 1,000m). Despite this, there has been no response from potential investors. The government is also planning to auction Offshore Petroleum Blocks in the Indus Basin and Makran Basin through both domestic and international bidding. Currently, the government is in the process of appointing global companies to market a total of twenty offshore Petroleum Blocks.
To expedite exploration and production activities, it is crucial to formulate a new oil and gas exploration policy or to revise the last Petroleum Policy 2012 aligned with global market dynamics. This policy should offer attractive financial and fiscal incentives, along with regulatory concessions, to attract potential investors.
The writer is retired chairman of the State Engineering Corporation
