New Oil and Gas Discoveries Boost Pakistan’s Energy Security

In a major development for Pakistan’s energy sector, new oil and gas deposits have been discovered from a well operated by Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Pakistan Oilfields Limited (POL) in Kohat district, Khyber-Pakhtunkhwa (K-P). This discovery, along with the recent revamp of gas compressors at the Sui Gas field by PPL, is set to enhance the country’s energy security significantly.

The newly discovered deposits were announced in separate notifications to the Pakistan Stock Exchange (PSX) on Tuesday. OGDCL, PPL, and POL reported successful tests revealing approximately 16.4 million standard cubic feet per day (mmscfd) of gas and 159 barrels per day of condensate (crude oil) from the Kawagarh-1 formation in the Razgir-1 exploration well, drilled on January 9, 2024. The TAL joint venture, which includes OGDCL with a 30% working interest, MOL Pakistan Oil and Gas Co BV (the operator) with a 10% stake, PPL with 30%, POL with 25%, and Government Holdings Private Limited (GHPL) with a 5% working interest, made this significant discovery.

OGDCL’s notification highlighted that the new find has mitigated risks associated with further exploration in the TAL block, paving the way for new opportunities and boosting the country’s indigenous hydrocarbon reserves. POL noted that the hydrocarbons were tested before any acid stimulation job, and while the initial results are promising, actual production figures may vary as testing continues.

PPL also made headlines with its successful revamp of gas compressors at the Sui Gas field, which has led to a production increase of 19 mmscfd of gas. This project, which began in March 2023 and concluded in June 2024, involved upgrading all seven SML compressors to operate at lower inlet pressures, effectively addressing declining wellhead pressure from aging wells. This enhancement is expected to contribute significantly to meeting domestic energy demands and conserving foreign exchange by increasing local hydrocarbon production.

The impact of these announcements was evident in the financial markets, with a notable increase in share prices for the involved oil and gas exploration firms at the PSX. Earlier in July 2024, POL reported a significant discovery from the Jhandial-03 well in the Ikhlas Block, located in Attock District, with 714 barrels of crude oil per day and 10.2 million cubic feet per day (mmcfd) of gas. This find contributes about 1% to the country’s total oil production and 0.3% to its gas output from domestic sources.

Currently, Pakistan relies heavily on energy imports, which account for nearly 70% of its total energy needs. Local production covers only about 30% of the national energy requirements. For the first 11 months of the previous fiscal year, energy imports amounted to over one-fourth of the total $49.85 billion in imports, translating to $15.34 billion, as reported by the Pakistan Bureau of Statistics (PBS).

To address this dependency, the government recently approved a policy for tight oil and gas discoveries, offering a 40% higher tariff on these hydrocarbons compared to conventional ones. This policy aims to boost local production and reduce the need for costly energy imports.