ENI discovery: New Petroleum Policy yielding good results
It is no surprise that oil and gas discoveries in Pakistan have gathered pace ever since the announcement of the Petroleum Policy 2012. ENI Pakistan announced a significant onshore gas discovery in the Khirtar Fold Belt Region, some 350 km north of Karachi. It is heartening that in times of near dearth of foreign investment in Pakistan, the E&P sector stands firm as the lone saviour.
That, Pakistans land has immense potential as geologists believe it is still brimming with more oil and gas to be tapped, is known to all. But, the E&P Policy had long been criticised for being unfriendly, as it failed to offer enough incentives for exploration and drilling activities. Pricing, amongst other issues, was the major disincentive, and the government deserves a pat on its back for addressing the issue. It raised the ceiling bar by $10/bbl and increased the wellhead price significantly for new discoveries, both onshore and offshore.
ENI is the largest foreign gas producer in Pakistan with an average production of 54,800 barrels of oil equivalent per day. The Company has a 40 percent operating stake in the discovered field. This major discovery is part of ENIs renewed strategy which aims to refocus exploration activities in the neighbouring areas to productive fields and to un-tap the existing potential through application of new geological models.
ENI seems to be wasting no time in order to speed up the process, and is already in discussions with the regulator and the joint venture to fast-track production. The discovery is currently estimated at between 300 and 400 billion cubic feet and its delineation requires further appraisal wells.
Besides this, other smaller discoveries by Pakistan Oilfield Limited and United Energy Pakistan Limited have also been announced recently. It is testament to the fact that higher Policy incentives have worked in triggering increased drilling and exploration activities. The government should now ensure that besides the pricing incentive, other procedural incentives allowed in the Petroleum Policy 2012 are also followed in true spirit, to foster growth in the E&P sector.