close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
October 27, 2020

Oil, gas discoveries estimate plunges umpteen times to 30bcf

Business

October 27, 2020

KARACHI: Pakistan’s estimated oil and gas discoveries have caved in multiple times to 30 billion cubic feet over two decades, making a leading state-owned multinational petroleum company to explore opportunities in foreign fields and shallow offshore avenues in the country amid mounting receivables, it was learnt on Monday.

Pakistan Petroleum Limited (PPL), which contributes over 20 percent to the country’s total gas supplies, is evaluating additional opportunities available in the global market and in shallow offshore in the country, Moin Raza, chief executive officer of the company told the annual general meeting.

The average size of the discoveries in the known oil and gas corridors/basins has substantially decreased to 30 billion cubic feet from 400 billion cubic feet in two decades. “PPL is expanding the portfolio to mitigate risk,” Raza said. “We have to cross the borders if we want to grow.”

PPL CEO said the company is directing funds towards the most optimal projects to ensure the best use of available resources in the wake of depressed liquidity.

“Despite the challenging economic environment, PPL managed to record Rs50 billion in profits after taxes, the third highest in its history,” he said. “However, cash collections from government-nominated natural gas customers remained stressed with liquidity becoming a major challenge for PPL to achieve growth objectives.”

The petroleum company led a consortium comprising of PPL, Oil and Gas Development Company, Mari Petroleum Company and Government Holdings Private Limited to participate in the Abu Dhabi bid round last year.

“Results of the bid round are awaited,” said Raza. “And we are quite hopeful that we would get a high prospective block.” The PPL CEO said the company’s shareholders are ‘aggressively’ pursuing mining activities along with the evaluation of opportunities in the energy value chain.

“As part of diversification strategy, PPL, through its 50 percent owned Balochistan Mining Enterprises is focusing on lead and zinc recovery,” he said. “Commercial dispatch of iron ore from Nokkundi commenced in June 2020. Detailed mine development plan with value addition through mineral processing is underway.”

PPL scored two discoveries during the year, Morgandh X-1 in operated Margand Block and Bitro-1 in partner-operated Latif Block. Morgandh discovery, made in the high hills of Kalat Plateau in the deeper frontier areas of Balochistan, is a major milestone in frontier exploration and has gone a long way in reaffirming the company’s exploration strategy in high-risk and high-reward areas.

The initial estimates suggest that Morgandh is a fairly good-sized discovery, which will be confirmed following its appraisal through additional studies and wells. PPL’s production of gas, liquids and liquefied petroleum gas (LPG) declined 11, 12 and 8 percent, respectively as compared to the previous year. Production of hydrocarbons during the year including the company’s share from joint ventures averaged at about 775 million metric cubic feet per day (mmscfd) of gas, 14,049 barrels per day of oil/condensate and 293 tons/day of LPG.

The primary reason for decrease in production is the substantially lower offtakes by Genco-II in Kandhkot Gas Field coupled with lower offtakes by refineries due to lockdown related to COVID-19 and natural decline in mature fields. PPL’s liquidity position continued to deteriorate due to the circular debt in 2019/20, according to the company’s annual report 2020. The trade debts of the company reached an unprecedented level of Rs312 billion from Rs227 billion as of June 30 last year.

Low recoveries from customers coupled with statutory payments, even on unrecovered balances, have resulted in additional stress on the liquid balances of the company. “The circular debt issue needs to be addressed on an immediate basis to ease the situation for the public sector exploration and production companies,” said the report. “The consequent liquidity constraint has the potential to significantly delay the on-going exploration and development activities of the company.”