Sindh allowed to sign deals with exploration firms

ISLAMABAD: In a new development, the prime minister may give his consent to extend the rights to the Sindh province from signing the PCA (Petroleum Concession Agreements) to exploring conventional oil and gas, including new oil and gases, shale, marginal and tight gases, shale oil and its sale to the national grid.

The prime minister has asked Dr Asim Hussain, former adviser to PM on petroleum and natural resources, to come up with a doable policy, particularly to explore new gases, a senior official privy to the development told The News.

“In a meeting with Dr Asim Hussian, Shehbaz has shown his willingness in this regard. It happened after a presentation some weeks back on upstream petroleum policies, including shale gas and shale oil reserves in the country, particularly in Sindh.”

Dr. Asim Hussain is the author of tight gas, flare gas policies, and the exploration and production 2012 policy as well.

To this effect, the Sindh government has decided to activate the dormant Sindh Petroleum Company and a former managing director of PPL (Pakistan Petroleum Limited) has been assigned to act as its MD.

During the presentation, Dr Asim Hussain drew the attention of the prime minister towards the 400mmcfd stuck-up gas in various fields in the wake of some court stays or litigations.

He also pointed out that some oil and gas reserves are explored but are not operational because of the non-availability of reason ble wellhead prices. Asim Hussain also pointed out the massive reserves of shale oil and shale gas the country has, particularly Sindh.

When contacted, Dr Asim Hussain confirmed the development that the prime minister had agreed to extend the rights to the Sindh government, from signing Petroleum Concession Agreements for exploration of oil and gas to selling products to the national grid.

Under Article 58 of the Constitution, the prime minister would allow the rights to sign the PCA, explore oil and gas and sell it to the national grid to the Sindh government.

The Sindh Petroleum Company is being activated after legislation, structure, and paid-up capital to start work with foreign and local companies in the shape of JVs (Joint Ventures). But to make the company fully functional, it is imperative to initiate and get the approval of new oil and gas policy, including the shale gas policy with pricing incentives.

For the Shale gas extraction, there will be different financial models and pricing for exploration companies as it involves high-tech equipment and expertise. Hydraulic fracturing and horizontal drilling are the technologies that play a key role in the extraction of shale gas.

As per the latest USAID study, Pakistan has massive deposits of 10,159 trillion cubic feet (tcf) of shale gas and 2.3 trillion barrels of oil, estimates that are several times higher than figures given by the US Energy Information Administration (EIA).

The EIA had reported in April 2011 that 206 tcf of shale gas was present in the lower Indus Basin, of which 51 tcf were technically recoverable.

However, in June 2013, the EIA revised the estimate upwards to 586 tcf, of which 105 tcf were tipped as technically recoverable. Apart from gas, EIA also saw the presence of 9.1 billion barrels of shale oil that were technically recoverable out of the estimated deposits of 227 billion barrels.

However, experts say the cost of exploring the shale oil and gas is very high as a well needs $2 to $3 million of additional cost to reach the shale reserves.