KARACHI: With the commencement of offshore drilling activities to explore gas reserves in the Indus delta, Pakistan hopes to receive "good news" between March and April with the discovery of oil or gas that could meet the country's requirements for the next 30 years, officials said on Wednesday.
"The discovery is anticipated to yield gas flows which can be as big as the Sui field, with estimated reserves of three to eight trillion cubic feet (TCF), or 25 to 40 percent of Pakistan’s total gas reserves," an official statement issued after a meeting between Petroleum Minister Ghulam Sarwar Khan, Irtiza Syed, CEO, and Stephen Morrell, Vice President of Exxon Mobil, in Islamabad on Wednesday, read.
Located in the Balochistan province of Pakistan, the Sui gas field was discovered in 1952 and had seven to eight trillion cubic feet of gas. At present, the daily average production is 394 mmcfd of gas and 24 barrels of oil. Despite diminishing reserves over time, the Sui gas field still remains one of the largest natural gas producing fields in Pakistan, according to Pakistan Petroleum Limited (PPL).
Syed briefed the minister about progress at the Indus G-Block where Exxon Mobil, along with other partners, has started spuding. The well’s diameter is 18 to 24 inches -- progress upto a depth of 1,900 feet has been made.
This endeavor is a joint venture formed by ENI (an Italian exploration company working in Pakistan since 2000), Exxon Mobil (an American company that has returned to Pakistan after 27 years), Oil and Gas Development Company OGDCL, and PPL to spud the Kekra-I exploration well in the Indus G-Block.
"It will give its first good news in March or April. Exxon Mobil has given the target depth of 5,500 feet. In March, the company hopes to send a specimen to Houston for examination. Similarly, ENI will send the specimen to Milan in March. From April to May there will be a reasonable idea that this well contains oil or gas", the statement added.
ENI, which is the operator of the block, has chartered, Saipem -- a rig ship to drill the exploration well which is located 230 kms to the southwest of Karachi. It began the process late last Friday. "The exploration cost is estimated at $75 million," statement added.
If successful, the discovery could yield reserves that could last for the next 25 to 30 years. "2019 will be a good year for all of us," Ghulam Sarwar Khan, who invited Exxon Mobil for onshore exploration, said
Currently, more than 200 people are working on the ship. Once the exploration activities are completed, it can generate a lot of employment opportunities, with Exxon Mobil expected to explore more wells at a later stage.
The petroleum minister, for his part, assured that the government would introduce measures to facilitate international investment. For this purpose, several duties and taxes have been waived off on the import of drilling equipment.
Analysts expect that with the discoveries, the avaibility of hydrocarbon will take at least three years.
"By or before April 2019, the companies will be in a position to assess the potential hydrocarbon flows from this offshore drilling along with their economic viability. Setting up the necessary infrastructure to make hydrocarbon flows commercially available can take three-five years as per channel checks," a research report by Topline Securities said.
Offshore success can be a real 'game changer' for Pakistan's exploration and production activities as the Indus G-Block falls under the ‘Ultradeep’ Zone-0 price mechanism.
"We estimate that at Arab Light Crude $60/bbl, the gas from Indus-G will be priced at $7.2/mmbtu with additional $1/mmbtu as an incentive for first three discoveries in offshore area, as per the Petroleum Policy of 2012. The zone is competitively priced, offering a premium of 80 percent, in comparison to the average applicable pricing on onshore blocks under older policies," the statement added.
