Govt opens bids for 20 onshore oil blocks

ISLAMABAD: The government on Friday opened bids for grant of petroleum exploration rights for 20 onshore blocks to oil and gas development companies.

The minimum investment to be carried out by the exploration and production companies in these blocks for prospecting will be over $71 million in three years, an official at the directorate general of petroleum concession, said an official.

“The current government aimed at less reliance on imports in the oil and gas by introducing ease-of-doing-business in petroleum sector and transparency to ensure a level-playing field for all competitors in exploration and production (E&P) sector,” the official said in a statement. “The onset of E&P activities will help create job opportunities and possible decrease in import bill.”

This was the first open bidding after one year of lull. The government planned to offer new onshore oil and gas blocks to potential bidders with import bill continuing to drain on foreign exchange reserves.

As of June 2020, Pakistan’s net oil reserves declined by 5 percent to 540 million barrels, mainly owing to no significant production upgrade at the existing fields or addition of new ones to compensate for natural depletion of 4-5 percent. Gas reserves remained unchanged despite production of 634 bcf. This was largely due to upward revision in Shahdadpur (operated by Pakistan Petroleum Limited) by 332.5 bcf, Miano by 149 bcf, Buzdar South by 30 bcf.

Pakistan’s oil consumption declined by as much as 11 percent in the fiscal year of 2019/20 as the coronavirus pandemic kept people indoors and industrial activity slowed to a trickle for a substantial part of the year, but analysts see demand bouncing back in fiscal 2020/21.

Petroleum demand is expected to increase due to normalisation of economic activity following the lockdown. Demand will also find support from better farm economics, lower interest rates and the 1.5 percent real GDP growth expected for the 2020-21 financial year.

The petroleum division’s official said apart from E&P activities the successful companies will also spend over $1.3 million in social welfare for the areas of their respective blocks.

“For blocks that have discoveries, investments of several hundred million dollars will be made by these companies to develop the production,” said the official. “The auction of new oil and gas blocks is part of the incumbent government strategy to revive E&P activities in the country.”