ISLAMABAD - The Ministry of Petroleum and Natural Resources has decided to cancel the auction of such concession blocks where the exploration companies had not made any investments. Government will do re-auctioning of these blocks along with new upcoming auctions.
Petroleum ministry officials revealed that auction of around 50 new concession blocks will be made during next fiscal year.
Apart from minimum work commitment, companies are obligated to spend a minimum of $30,000 per year in each block on social welfare schemes. The ministry has identified eight such concession blocks where the winning companies have not made any investment. Therefore, official said, the government has decided to cancel the earlier lease agreements and would re-auction these blocks. The previous government had auctioned 50 concession blocks but leasing licence for initiating drilling were only issued for 28 blocks.
Officials said that the process to issue lease licences for already auctioned blocks is slow because after the 18th amendment, all the provinces become partner of 50 percent in exploration wells so therefore federal government is bound to get the consent of provincial governments for issuance of lease licences to exploration companies for already auctioned blocks. The PML-N government took up the matter with provinces and leasing licence for remaining 22 blocks would be issued in the month of April and May 2014. The issuance of leasing licences for 50 blocks would transformed into a guaranteed investment of $450 million in the next 3 years, he added. As of now, Pakistan’s total oil production is 90,000 barrels per day which is only 15 percent of the total consumption and the gap is being filled by imports. The gas production is 3.7 billion cubic feet against the constrained demand of 6 billion cubic feet. The current demand is constrained because the government has imposed a ban over gas connections to new localities.
The estimates for non-constrained demand for gas are 8 billion cubic feet. According to officials, 73 new wells have been dug and 17 discoveries were made. These discoveries will subsequently add 130 million cubic feet of gas per day (mmcfd) and 3,553 barrels of oil per day (bpd) to existing production. So far, 50 mmcfd of gas and 2,000 bpd of oil have been added in overall production.
Various exploration and production companies currently hold 125 exploration licences across Pakistan. Moreover, in existing fields, production has increased by 184 mmcfd and 5,962 bpd. Last week, country’s oil production reached 84,374 bpd - the highest in its history.