Strategic shift to gas exploration outlined: OGDC posts big leap in recovery of receivables

KARACHI: Oil and Gas Development Company Limited (OGDC) has reported significant progress in receivables recovery and outlined a strategic shift toward enhanced gas exploration, according to key takeaways from the company’s corporate briefing held on Monday following its first-quarter FY2026 results.

The company management informed analysts that OGDC has recently concluded 3D seismic acquisition at its Uch field, while seismic activity continues at the Bettani block, where two wells have already been drilled and prospects for a third well are under evaluation.

The company said it is actively moving into higher-risk exploratory areas to diversify its reserves base and boost production capacity.

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A major improvement was noted in receivables collection, which now stands at 109 percent of total billing, driven by stronger inflows from power and gas sector clients. Recovery from Uch has reached 177 percent, while SNGPL stands at 104 percent and SSGC around 90 percent.

Management stated that power sector circular debt receivables related to Uch have declined to Rs59 billion, compared to Rs89 billion in December 2024, and expressed confidence that the remaining amount will be recovered by the second quarter of FY2026.

Discussions are ongoing with the government on resolving gas sector circular debt, as part of a broader energy-sector reform initiative that also aims to address gas curtailment and RLNG oversupply.

OGDC management confirmed an agreement with SNGPL to curtail gas only from fields producing dry gas without oil or condensate, reducing the impact of previous curtailments on the Nashpa field. The adjustment has cut crude curtailment by approximately 1,000 barrels per day, according to company officials.

The company said that while it initially pivoted toward oil production to offset losses from gas curtailments, it has now shifted focus back to gas output, given improving policy conditions and higher medium-term demand expectations. Management expects gas production to outpace oil production over the next few years, with exploration and new discoveries forming the core of OGDC’s growth strategy.

Regarding gas allocation, OGDC noted that if MARI gas is permanently allocated to fertilizer plants, it may divert KPD-TAY field gas to alternate consumers or third parties, given that the gas quality meets pipeline specifications.

Copyright Business Recorder, 2025