Oil, gas output falls on lower demand, field curtailments

KARACHI: Pakistan’s oil and gas production declined by 11 per cent and 7.0 per cent year-on-year (YoY), respectively, during the first nine months of the current financial year.

According to a report by Arif Habib Limited, the contraction in hydrocarbon output stems from forced curtailments at the Nashpa and TAL blocks, coupled with lower gas demand. Major oil fields -- including Nashpa, Makori East, Pasakhi, Adhi, Chanda, Mardenkhel, Maramzai, Rajian and Umar -- experienced a drop in production during July-March of the current fiscal year.

Regarding gas production, key fields such as Mari, Qadirpur, Sui, Sharf, Kandhkot, Nashpa and Sutiari Deep recorded a decline. On a quarterly basis, oil and gas production in Pakistan decreased by 13 per cent and 8.0 per cent YoY, respectively, in the third quarter of the ongoing financial year.

During the first nine months, a total of 15 exploratory wells and 23 appraisal/development wells were spudded -- falling short of the target of 27 exploratory wells and 40 appraisal/development wells.

Exploration efforts by listed Pakistani exploration and production (E&P) companies resulted in 18 discoveries during the nine-month period, with a cumulative discovery size of approximately 3,184 barrels of oil per day (bopd) of condensate and 279 million cubic feet per day (mmcfd) of gas. The report projected a decline in earnings for Pakistan Oilfields Limited due to the reversal of a provision for depletion allowance in the third quarter of the previous fiscal year, a 2.0 per cent YoY drop in average realised oil prices, and YoY reductions of 7.0 per cent and 18 per cent in oil and gas production, respectively.

Mari Petroleum Company Limited (MARI) is expected to post increased earnings, driven by higher exploration costs, which offset the impact of incremental royalty charges on the wellhead value of the Mari D&P Lease. However, oil production declined by 5.0 per cent YoY, while gas production rose by 9.0 per cent YoY during the quarter.

Oil & Gas Development Company Limited (OGDC) is anticipated to record a decrease in earnings due to a 4.0 per cent and 8.0 per cent YoY drop in oil and gas production, respectively, a 10 per cent YoY fall in oil prices, and the depreciation of the US dollar against the Pakistani rupee. Pakistan Petroleum Limited (PPL) is also projected to see a decline in earnings, attributed to a 10 per cent and 7.0 per cent YoY reduction in oil and gas production, respectively, lower oil prices, and a 2.0 per cent YoY decrease in the wellhead price of Sui.