ISLAMABAD: Pakistan is close to tapping into huge oil and gas reserves after offshore drilling nearly 4,000 meters into the sea near the Pak-Iran border yielded signs of large deposits, Minister for Petroleum Ghulam Sarwar Khan said on Tuesday.
Much of the mineral-rich South Asian nation remains unexplored despite gas discoveries dating back to the 1950s. Conventional gas reserves are estimated at 20 trillion cubic feet (tcf), or 560 billion cubic meters, and shale gas reserves, which are untouched, at more than 100 tcf.
US-based ExxonMobil, one of the world’s largest oil and gas firms, and Italian firm Eni Pakistan Limited, are jointly drilling for gas offshore in Pakistan’s Arabian Sea, but many other Western companies have not returned after leaving more than a decade ago because of militant violence.
“Based on the samples received so far from the drilling, we are hopeful to get good news by next month,” the minister said in an informal chat with journalists in Islamabad.
He said ExxonMobil was expected to drill up to 5,500 meters in the deep sea by next month with a total investment of $75 million. “The offshore exploration and drilling is a difficult and highly technical job, but it is going perfectly well so far,” he said.
According to an annual report from the Petroleum Ministry, Pakistan’s domestic gas output has plateaued in the last five years, falling to 1.46 trillion cubic feet in 2017/18, from 1.51 trillion cubic feet in 2012/2013. The country’s population, on the other hand, has sharply risen to 208 million people, driving fuel demand from industries and new power plants higher.
Gas demand was estimated at 6.9 billion cubic feet per day for 2017/18, according to Pakistan’s Oil & Gas Regulatory Authority, nearly 3 billion cubic feet more than daily output.
To help plug the deficit, Pakistan has built two liquefied natural gas (LNG) import terminals, and demand is expected to hit 6.97 billion cubic feet a day for 2018/19, and 7.06 billion cubic feet a day in 2019/20. But LNG is expensive, so Islamabad wants foreign companies to ramp up domestic exploration.
Pakistan’s domestic crude oil production currently fuels just 15 percent of national petroleum demand, with the remaining 85 percent catered to with imported resources. As a result, Pakistan has racked up a large current account deficit and spends over $13 billion of its foreign exchange reserves annually on foreign oil imports.
In May last year, ExxonMobil, along with other companies including Government Holdings Private Limited, PPL, Eni and the Oil and Gas Development Corporation, acquired 25 percent stake in offshore drilling in Pakistan.
The petroleum minister said he expected more international companies to partake in offshore and onshore drilling in the coming months due to “numerous tax incentives and exemptions” recently offered by the government.
“The law and order situation, which was a major concern of international companies, has improved significantly,” Khan said. “We are planning to offer more tax incentives to international companies for exploration of oil and gas reserves in Balochistan.”
Speaking about pressure from the International Monetary Fund (IMF) to increase the price of natural gas before signing a possible bailout deal in April, the minister said that the gas utilities had demanded a 144 percent increase in the tariff with effect from July 1, 2019 and “relevant departments are working on it.”
“We will resist the IMF pressure and try to pass minimum burden on to poor consumers,” he said.
