Hydrocarbons: gagged by law and order

Mohammad Naeem Malik, Managing Director and CEO of the Oil & Gas Development Company, is a Chemical Engineer by profession, with 30 years of experience in the petroleum sector. He joined the Ministry of Petroleum & Natural Resources in 1981, where he worked on various important assignments for the Government of Pakistan. Malik served as a director on the boards of almost all public sector petroleum companies and presently is a director on the board of Mari Gas Company Limited.
HYDROCARBONS: GAGGED BY LAW AND ORDER The Pakistan oil and gas industry has yet to hit big time. Though, the history of exploration in areas we call Pakistan is as old as the history of world oil exploration, the biggest obstruction in hydrocarbon exploration in Pakistan today is law and order.
"The investors are more concerned about the country's perception...the risk of operating is getting higher day by day, during the century and a half old exploration history, all the low hanging easy-to-find fruits have already been plucked," Mohammad Naeem Malik, Managing Director/CEO, Oil & Gas Development Company Limited, Islamabad, told BR Research in an interview recently.
Malik says Pakistan's total sedimentary area where there is a possibility of finding hydrocarbon is nearly 827,000 square kilometres. "Two-third of this area is yet to be explored. However, most of that area consists of places where safe entry is an issue like prospective areas in Balochistan and Khyber-Pakhtunkhwa," he said.
Yet, despite all odds, the oil and gas exploration giant has entered in areas in Balochistan like Zin which were difficult to operate hitherto with a mission to find new hydrocarbons.
So, when should we expect the good news, BR Research asks. "We are working on an exploration well in Zin Block in Balochistan and we hope to find substantial gas reserves which is why we have taken high risks of entering the block which has been with the company for over a decade .......the civil works are underway and hopefully there will be good news around mid of this year ie June - July 2011," Malik said.
"Had there been no law and order problem, I can assure you that there would have been no gas load management / energy crisis in the country today," says Malik. But he adds that law and order is "a temporary phenomenon", and that the company plans to work with the government and other parties to provide a smooth and safe way for transporting gas to consumption centres.
Still, as long as law and order woes exist, Pakistan must explore other exploration avenues - avenues, where there are no or little law and order hindrances - such as the, reportedly, 285,000 square kilometres of offshore potential in Pakistan.
"All we need is one significant discovery in offshore and the entire area will open up for exploration," asserts Malik. He says that preliminary studies have been quite promising, and "the aim should be to try and further incentives the companies to help find hydrocarbons in those areas". Yet, despite the fact that offshore drilling is a costly process, and despite "so many unsuccessful attempts" there is still interest in Pakistan's offshore areas..
"A lot of companies have done the primary work like seismic surveys on its processing and interpretation. Not everyone however, can pursue it because of the high cost associated with it, we have yet to find the key to fully understand and exploit offshore in Pakistan" says Malik, adding that his company proposed to the government to look for an out of the box solution for offshore.
For a company to be interested in offshore, the reserve size has to be really big, and so to ensure successes, and OGDCL's proposal for the government "is to incentives the company which makes the first discovery on its blocks," suggests Malik, who believes that this move will open the gate for new players to come and work in the offshore sector.
Sharing his views on government policies and regulations related to the sector, Malik says he is quite satisfied with the framework. "Pakistan's E&P sector is one of the few in the region which already has a transparent predefined system....the bidding system is open and provides level playing field to every participant," he said.
Interview by Ali Khizar Aslam