LAHORE  - Average oil production increased by an impressive 13.8 per cent annually to 80,000 bopd in 4MFY14 and the improvement largely emanated from Tal Block and Nashpa, cumulatively adding 11k barrels to daily production.  Despite fears of water incursions in Manzalai and subsequent drop in production from the field, volumes from Tal Block grew more than 90% to 15.5kbopd versus 8.1kbopd in 4MFY13. At Nashpa, volumes rose 28% to 16.0kbopd in 4MFY14 versus 12.5kbopd in similar period last year.

Although oil production crossed 82kbopd earlier this month (as suggested by the latest PPIS data), we believe there is more to come. Our estimates suggest total oil production will average 91kbopd in FY14. Near-term triggers include tie-in of Makori GPF/Makori East-3 (Dec 2013) and completion of development projects in Sinjhoro/KPD-TAY (April 2014). Upon timely completion, we believe these projects will add another 19-20kbopd, taking Pakistan’s oil production near a record 100kbopd by FY14 year-end.

During 4MFY14, gas production dropped to 3,981mmcfd, 3.3% lower as against 4,118mmcfd in 4MFY13. Major decline came from Uch, Sui and Qadirpur while Kunnar’s production led volumetric leaders. Key triggers are essential to materialize as we expect gas production to average 4,248mmcfd in FY14. These include additional 320mmcfd from Uch/Tal Block (Dec 2013) and 150mmcfd KPD-TAY/Sinjhoro (April 2014). These developments will take Pakistan’s gas production near 4,400mmcfd in 4QFY14.

According to Vahaj Ahmed of Topline Securities, the country’s oil production that was 77,000 barrels per day at beginning of 2013 has reached 82,000 bopd (thousand barrels of oil per day), a 7% increase.

As per data, oil production in the country remained in the range of 62-70kbopd between FY03-12, rose to 76kbopd in FY13 and has now crossed 82kbopd. Despite this growth, Pakistan still meets 82% of its oil needs through imports.  However, comparing production in 4MFY14 with corresponding period last year helps us better grasp the trajectory of volumetric growth.

Oil production averaged 80kbopd versus 70kbopd in 4MFY13 (up 13.8%YoY), while gas production dropped 3.3%YoY to an average 3,981mmcfd. Resultantly, combined oil & gas production in the country dropped 1.8%YoY to 789kboed as compared to 804kboed in 4MFY13.