Pakistan’s economy is strained by an imbalance in its import-export equation. Country’s inability to produce value-added products is crippling its export potential for many decades. And a fast-growing population, rural-urban migration and growth of cities is increasing demand for energy sources.
Pakistan imports almost 80% of its energy resources, causing a huge spike in its import bill – it imported $14 billion worth of mineral fuels in the FY-2019, i.e. 28% of its imports. During the pandemic, oil prices plunged as the demand hit rock bottom with enforced lockdowns all around the globe.
The unusual situation also led to a fall in Pakistan’s import bill by 33% to $668 million during March 2020 as compared to the bill during March 2019, i.e. $ 995 million. As energy imports plunged, the construction and mining machinery imports went up by 119% to $25.98 million in March 2020 compared to $11.45 million in March 2019.
Read more: A challenging time for E&P sector
The rising mining machinery imports resonate with the present government’s focus on exploring domestic reserves of oil and gas to reduce the additional strain these imports create on the state coffers.
It is in this context that the latest block bidding round assumed greater importance. Directorate General of Petroleum Concessions (DGPC) provisionally awarded four new exploration blocks to Mari Petroleum Company Limited (MPCL), the company declared in the last week of Jan 2021.
The Block Bidding Round 2020 was arranged by the government for 20 blocks and 15 were awarded after aggressive bidding based on work units committed by 9 different E&P companies. MPCL had bid for 6 blocks, it has won awards for 4 and 3 of these are in Baluchistan where MPCL has been working and carrying geological studies for some time.
Read more: Mari Petroleum Company bags 4 new blocks
It 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 Nareli Block in Balochistan.
Likewise, it would hold 60% working interest as the operator with Oil and Gas Development Company (OGDC) as partner, 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 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. Award letters have been issued in the last week of January, these will be followed by Petroleum Concession Agreements (PSA) and then formal exploration licenses and execution of joint operating agreements among the respective partners.
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: Aggressive approach towards exploration 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.
Pakistan’s hydrocarbon potential – despite work since 1960’s – still remains untapped for various reasons of technology deficits, shortage of skilled human resources and capital investments and lack of strategic direction. Ministry of Energy, Petroleum division is, therefore, eager to attract foreign investment and skillsets with the aim to kickstart exploration activities to maximize indigenous production of oil and gas.
Read more: Mari’s dividend cap removed by ECC
Apart from MARI, Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) are two public sector companies involved in the 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.
Mr. Faheem Haider
Mari Petroleum Company Limited
Mr. Faheem Haider became Managing Director / CEO of the MPCL in August 2020. MPCL is considered a military corporate and traditionally only retired four-star generals had headed this prestigious energy company. But given the new emphasis on exploration of oil and gas resources by the government, there was a change of strategy.
Reportedly Mr. Haider was head-hunted by the government for this position -due to his impressive professional background. Mr. Haider holds a Master’s degree in Petroleum Engineering & Production Management (w/distinction) from Imperial College London; a post-graduate diploma from College of Petroleum Studies, Oxford UK and a BSc (w/honors) degree in Petroleum Engineering from University of Engineering & Technology, Lahore Pakistan.
During his professional career spanning over 27 years, Mr. Haider has held various technical and leadership positions with Union Texas Petroleum Pakistan, OMV (Pakistan) Exploration GmbH, Helix RDS Ltd in the UK, BG Group in UK & Oman and Neptune Energy Group (formerly Engie) in Egypt, France and United Kingdom.
Mr. Haider brings to his new assignments a sound understanding of E&P projects life cycle from a technical, operational and commercial perspective. Apart from handling core E&P operations in different parts of the world, he has hands-on experience of joint venture management, business development, strategy and growth delivery, operational efficiency, organization development and transformation and stakeholder’ management.
Before joining MPCL, he was based in London as Head of Strategy and Business Development for Neptune’s North Africa and Asia pacific business. He significantly contributed towards the growth of Neptune’s business in Egypt, Indonesia and Australia. With the renewed emphasis on exploration, Mr. Haider is the man government of Pakistan will be looking towards.