KARACHI:
In a surprise reversal, Pakistan has reversed the historical trend of depleting its oil and gas reserves, reporting a 26% increase in crude oil reserves and a 2% increase in gas reserves in the six-month period ending June 30, 2024.
Thanks to new discoveries and an upward revision of recoverable reserves, the lifespan of oil and gas reserves has increased by one year to ten and 17 years respectively.
Citing data from the Pakistan Petroleum Information Service (PPIS), Optimus Capital Management reported that available oil reserves increased to 243 million barrels by June 30, 2024, compared to 193 million barrels on December 31, 2023.
Similarly, recoverable gas reserves increased to 18.47 trillion cubic feet (tcf) by the end of June 2024 compared to 18.10 tcf in December 2023.
Hamdan Ahmed, energy sector analyst at Optimus Capital, noted that crude oil production increased by a net 50 million barrels due to new discoveries and an increase in available reserves to higher levels.
In a commentary breaking down the data, the analyst said oil reserves increased by 62 million barrels gross due to the addition of new fields and a positive revision of existing fields. However, oil production from old fields fell by 12 million barrels, so reserves increased by 50 million barrels net in six months.
Gas reserves increased by 915 billion cubic feet (bcf) gross, driven by new field development and an upward revision to available reserves, while production decreased by 551 bcf. Accordingly, gas reserves increased by 364 bcf net in the six months covered by the report.
Ahmed announced that the increase in hydrocarbon reserves was estimated at fields of the Oil and Gas Development Company (OGDC) and Mari Petroleum.
“These positive developments, along with reforms in the gas sector and improved auctions of new blocks, are expected to make the exploration and production sector (on the Pakistan Stock Exchange) attractive,” the analyst commented.
He said that significant reserves of 62 million barrels of oil and 915 bcf of gas had been added. The increase in gas reserves was mainly due to the discovery of the Ghazij field in Mari (plus 758 bcf) and the Shewa fields (plus 351 bcf).
Similarly, the increase in oil reserves was attributed to OGDC’s expansion efforts in the Pasakhi, Kunnar, Rajian and Sono fields, which brought a cumulative increase of 50 million barrels and further extended the company’s reserve life from seven to eleven years.
MOL’s Tal block had remaining reserves of 16.7 million barrels of oil and 470.9 bcf of gas as of June 2024. Although the fields are on a downward trend, “we expect an increase in recoverable reserves from future expected discoveries in Razgir,” Ahmed said.
OGDC, Pakistan Petroleum Limited, Mari and Pakistan Oilfields Limited have oil reserves of life of 11, 5, 16 and 6 years respectively. Their gas reserves are of life of 18, 10, 17 and 7 years respectively, he said.
Energy experts estimate that crude oil from local fields helps refineries meet 70 percent of diesel demand and 30 percent of gasoline demand. Oil marketing companies meet the rest of the fuel demand through imports.
Although exploration companies have discovered significant new reserves, especially oil, within six months, they continue to complain of lower production compared to consumer demand. They have not made any major discoveries in the last two decades.
Exploration companies typically attribute sluggish production in some of the projected high-yield fields to poor public policy. They also cite low prices for their products as another major reason for the slowdown in production.
The government recently adopted a tight gas policy that offers a higher price for new and deep-seated discoveries.
Experts believe that the new policy and the auctioning of additional fields will accelerate hydrocarbon exploration. At the same time, however, the government must ensure the safety of the exploration companies’ employees.
Imports of oil and gas proved costly. The share of energy, including liquefied natural gas (LNG), amounted to around a fifth of the total import bill in July, sometimes rising to a quarter.
On the other hand, the demand for heating oil is considerably lower than current production due to the closure and reduced dependence on heating oil power plants.
Low consumption has forced the ageing refineries to export fuel oil at negative margins and operate their plants at low capacity. Some of them are finding it difficult to shut down their plants completely as they produce premium products such as gasoline and diesel in addition to fuel oil.
Consumer demand for gas is estimated at 6.5 bcf per day, while local production is around 3.3 bcf per day. The deficit is partially offset by imports of expensive LNG and temporary supply suspensions.
