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July 6, 2019

Govt plans to offer 40 new blocks to enhance domestic gas production

Business

July 6, 2019

LAHORE: The government is planning to offer massive investment opportunities in the upstream oil and gas sector, unveiling five offshore and 35 onshore blocks within a year, primarily with a view to contain tariff hike, an official said on Friday.

“There is no doubt that gas tariff increase can only be countered by increasing production of relatively cheap domestic gas; however, unfortunately, for the last five and half year, no block was tendered for upstream gas exploration,” Nadeem Babar, Special Assistant to Prime Minister on Energy, said during a press briefing.

“We intend to showcase five offshore blocks in tendering process, expected to complete in a year, while we have already awarded five blocks for onshore exploration during last six months, whereas another 35 blocks have been identified so far.”

The prime minister’s assistant said, “We are in the process of introducing new exploration and production policy and for this purpose consultation with the stakeholders have been done for three months”.

“We are going to introduce six major changes in the E&P (exploration and production) policy that will effectively get rid of the bottlenecks hindering exploration activities in the country,” Babar said.

He emphasised that these changes had nothing to do with the price as no stakeholder demanded greater financial incentive, instead, he said,”We are focusing on fully facilitating investor for accelerating upstream exploration of petroleum products”. “In next two months, after getting approval of revised E&P policy for petroleum sector from the cabinet, we will present it in the Council of Common Interests (CCI). After getting a nod from the CCI, we are aiming to allocate 35 blocks for exploration with a year,” he said.

The already allotted blocks had promising prospects for increasing production of petroleum products, Babar said, adding that major global players like Kuwait Petroleum and national company of Poland were also interested in these blocks.

“The world’s leading company Exxon has shown willingness to take part in the next round of blocks’ allocation, while Italy’s ENI also upbeat about exploration and interested in investing in three to four blocks,” he said.

Talking about much hyped offshore drilling, Babar said, “Enough data indicates that we have gas reserves under the seabed and we are confident that we will hit them in future attempts”. “If you drill a particular point, it depends whether you hit the reserve or not. Unfortunately, we could not succeed in the last attempt,” the PM’s assistant said.

“It does mean we have no offshore fossil fuel reserves or we don’t want to explore them anymore. We will start drill again outin the sea,” he vowed. However, he acknowledged the notion that they were too euphoric in anticipation of finding offshore gas reserves. “We were hoping for the best but we could not yield desired result.

We will go for five new offshore blocks too in the next one year and they will be offered for tendering.”

The government has also decided to do some survey itself too for supporting exploration activities in the sea, Babar said. “We want to give maximum assistance to intended investors for fully exploiting potential of offshore petroleum reserves,” the premier’s assistance said.

He said it was really regrettable that previous regime did nothing to explore domestic fossil fuel reserves.

Giving an idea on how massive the prospects were there for increasing production of hydrocarbons, he said, the thirty percent of onshore area of Pakistan had variable prospects of finding oil and gas reserves and thus drilling activity should have been done there.

“However, we are still able to only explore four percent of this huge opportunity,” Babar said. To a question, he said Unaccounted for Gas (UFG) of Sui Northern Gas Pipelines Ltd (SNGPL) were being effectively controlled. “The UFG losses for industrial sector are as low as 1.5 percent, while efforts are being done to curb losses of domestic and commercial sectors also,” he said.

TO contain gas losses, he said, a plan was being finalised with the help of elders of Khyber Pakhtunkhwa southern districts and provincial government to establish distribution network in order to provide gas supply with an aim to reduce losses with formal provision of gas to the area.

About gas tariff hike, the special assistant said under present circumstances,

conservation was the only solution for reducing cost of gas. If you land in higher slabs, gas tariff will be very high, he said, and added that consumers should be aware that prudent use of gas would be in their benefit.

He made it clear that no further raise was planned for tariff revision as revenue generation would almost equal expenditures with latest revision. “As a policy measure, we are aiming to provide relief to domestic consumers, especially having low usage,” Babar said.

Referring to LNG import, he said that a robust plan to import LNG in coming months had been devised to meet peak winter demand. Moreover, he said, out of five LNG import terminals, work on two to three was hopefully to start soon through global and local energy giants.

There are four terminal sites at PQA while one at located Sonmiani, Balochistan. To another question, the prime minister’s special assistant said, the government had requested Qatar for LNG import on deferred payments. “The discussion is ongoing and we expect a good outcome,” Babar said.

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