Pakistan is eager to open up its gas deposits to foreign energy companies in a bid to boost domestic production amid soaring demand, two government officials told media this week. The country has trillions of cubic feet in natural gas reserves, and although some of these have been exploited, the last decade has seen an outflow of foreign energy investors because of Islamist violence. Is the worst over?
Pakistan, a country with a fast-rising population, has recently been plagued with power outages largely resulting from a shortage of fuel necessary to keep its power stations going. Imports of gas and LNG are on the rise, but Imran Khan’s government seems to be aware that domestic production is almost invariably cheaper.
As a result, Pakistan is now preparing to start tendering gas blocks to all parties interested in exploration.
“I expect in the second half of this year we will be auctioning at least 10, if not 20 blocks for exploration,” the head of the government’s task force for an energy reform, Nadeem Babar, told Reuters earlier this week. He added that the government was in the process of making changes to its natural gas exploration and production regulations and drafting the country’s first ever shale resource policy.
“Pakistan provides a level playing field for all the E&P companies and even state-owned companies also have to participate in bidding rounds and compete with other companies,” said the country’s Minister for Petroleum and Natural Resources as quoted by The News International.
Pakistan imports nearly 80 percent of energy requirements from the international market. The country’s demand for energy has been increasing by 8 percent a year,” Ghulam Sarwar Khan also said, adding the government was doing its best to make Pakistan a more investor-friendly country as part of efforts to change the status quo in energy supply and demand. Related: The EIA Cuts U.S. Oil Output Projections
Pakistan has estimated conventional gas reserves of 20 trillion cu ft and shale gas reserves exceed 100 trillion cu ft, which certainly makes the country an attractive destination for gas drillers as long as the security situation remains stable.
So far, the authorities have delineated more than 30 gas blocks, all onshore, Babar also told Reuters. If these attract sufficient interest, they could go a considerable way towards reducing the gas shortage plaguing the country, where demand for gas for 2017/18 was calculated at 6.9 billion cu ft daily, exceeding production by almost 3 billion cu ft.
With such demand levels—and rising, too—Pakistan is naturally an attractive destination for gas exploiters. Russia, Iran, and Qatar are all large suppliers. Earlier this week, Pakistani media reported government officials were negotiating an increase in Qatari LNG imports from 500 billion cu ft daily to 700 billion cu ft daily. Last month, the government inked an import deal with Gazprom for 500 million to 1 billion cu ft daily.
The country also recently completed two LNG import terminals but the super-cooled fuel is more expensive than Islamabad would like, especially given its level of import dependency.
According to Nadeem Babar, Aramco, Gazprom, and Exxon have already expressed interest in some of the blocks to be auctioned later this year. Italy’s Eni is already active in Pakistan and may join the bidders along with others attracted by the underexplored resources in the country where one of three wells yields commercial gas.
By Irina Slav for Oilprice.com
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