In the latest block bidding round, the Directorate General of Petroleum Concessions (DGPC) provisionally awarded 4 new exploration blocks to Mari Petroleum Company Limited (MPCL), the company declared on Wednesday.
The Block Bidding Round 2020 was arranged by the government and the blocks were awarded after aggressive bidding based on work units committed by different E&P companies. MPCL has been assigned two blocks as the operator and two as the joint venture partner with other local companies.
Mari Petroleum would have 39 percent working interest as the operator with partners Spud Energy having 29 percent and Pakistan Oilfields Limited (POL) having 32 percent interest in in Nareli Block in Balochistan.
Likewise, it would hold 60% working interest as the operator with partner Oil and Gas Development Company (OGDC) having a 40 percent share in Sharan Block in Balochistan.
In North Dhurnal Block in Punjab, POL would have a 60% percent working interest as the operator while MPCL would be have a 40% stake as its partner.
Killa Saifullah Block in Balochistan would have OGDCL as the operator having a 60% working interest, with Mari Petroleum as its partner having a 40% stake.
Formal award of the blocks is dependent upon the approval of the acquisition by Mari Petroleum’s board of directors; fulfilment of petroleum exploration licenses and petroleum concession agreements with the government; execution of joint operating agreements among the respective partners and completion of formalities.
Mari Petroleum Company Secretary Assad Rabbani in a notification issued to the Pakistan Stock Exchange (PSX) said that the probable acquisition of the aforementioned blocks is in accordance with the company’s exploration business plan targeted at expanding exploration acreage to build up their hydrocarbon reserves.
Pakistan Counters Energy Challenges
The government has provisionally awarded 15 new blocks to four local E&P companies to unearth new hydrocarbon deposits within the country so that the nation’s heavy dependency on imported energy is reduced. Nine exploration and production companies made bids for the 15 blocks, while the government had invited bids for a total of 20 blocks.
Prime Minister Imran Khan is especially keen on stimulating oil and gas exploration in the country and that is why last year he ordered for the creation of a dedicated security force in a bid to attract more companies for exploration and increased production of domestic oil and gas resources. However, no progress has been made on the creation of the proposed force as yet.
2020 had been a tough financial year for the oil and gas exploration sector as the economic activities around the globe came to a halt owing to the lockdowns. Due to oversupply and low demand, the companies were forced to trade in the red. Overall, in FY20, the production of oil declined by 14% year-on-year while gas production fell by 8% year-on-year. Apart from the oil prices hitting an all-time low in FY20, the year was full of uncertainties and very few companies are likely to emerge unscathed from the pandemic blow.
In Pakistan, the exploration costs declined during the year due to the Pakistan Petroleum Limited being uninvolved in the exploratory activities as the company faced a cash crisis. One the other hand, Mari Petroleum Company Limited (MARI) has come out as a clear winner as it depicted the highest increase in its earning.
The Next Step
Pakistan is blessed with a great deal of hydrocarbon potential, most of which still remains untapped. Ministry of Energy, Petroleum division is therefore eager to attract foreign investment with the aim to kickstart exploration activities to maximize indigenous production of oil and gas. Apart from MARI, Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) are two public sector companies involved in exploration of oil and gas in Pakistan. These companies contribute to a major share of oil and gas production. Therefore, the Ministry of Energy has encouraged them to enter into joint-ventures with other foreign E&P companies.
BMA Executive Capital Executive Director Saad Hashmi said that the improved law and order situation in Pakistan would prompt the E&P companies to expedite their efforts to find new hydrocarbon deposits in the country.