PPL’s offshore expansion plan hit by liquidity crunch

KARACHI: Circular debt-driven liquidity crunch in energy sector has frustrated the plan of Pakistan Petroleum Limited (PPL) to invest in exploration and production in offshore fields, its top executive said.

Moin Raza Khan, managing director and chief executive officer of PPL said circular-debt driven liquidity paucity hindered capital-intensive offshore exploration plans.

“As the known corridors have already been discovered in Pakistan and are matured, it has become vital to explore frontier regions as well as expensive off-shore for growth,” Khan said in a statement.

“However, the liquidity crunch due to circular debt is a real challenge facing the industry and particularly, PPL.”

PPL contributes more than 20 percent to national gas supplies.

The company’s predecessor and major stakeholder is a British Burmah Oil Company. Pakistan Petroleum Limited went public in 1997.

Circular debt has been increased to cross one trillion rupees in the past two years, upsetting income statements of companies belonging to public and private sectors.

PPL has drilled 63 exploratory wells since 2012, resulting in 22 discoveries in operated areas with a success ratio of 35 percent adding about 2.764 trillion cubic feet gas and 127 millions of barrels oil in place.

Among these, 11 discoveries were made in Gambat south block acquired in 2009, which currently produces over 100 billion cubic feet gas, 1,100 barrel oil and 15 metric tons liquefied petroleum gas per day through three producing fields.

The discovery at Sui in 1952 was a landmark for both the company and country, being the largest gas field with more than 12 trillion cubic feet of reserves.

Following the sui discovery, impetus was provided to industry for exploration activities in south region, as earlier only Potwar region in north was the focus of exploration and production activities.

PPL made a string of significant discoveries after Sui at Zin, Uch, Khairpur and also in currently operated assets at Kandhkot and Mazarani in 1959 followed by an oil and gas discovery at Adhi in 1978, which are still producing through dedicated facilities.

Pakistan Petroleum Limited also confirmed the presence of gas in Qadirpur structure, a 6 trillion cubic feet field, through its well Kandhkot-9 in early 1986.

Later the government engaged International Finance Corporation and a gas price agreement came into effect for installation of a compressor plant at Sui along with development wells at Sui, Kandhkot and Adhi.

Since 2009 PPL has increased its portfolio by acquiring 14 blocks and another 11 in the 2013-bidding round, adding around 48,000 square kilometers acreage.