Today News From Pakistan

The bidding is for the largest number of blocks ever is part of a bid to promote self-sufficiency in energy.— Photo from File

ISLAMABAD: The bidding for 53 oil and gas exploration blocks, the largest number ever, will be held on Wednesday and all the 15 E&P companies operating in Pakistan and some new foreign-based firms are expected to participate.

Sources in the ministry of petroleum and natural resources told Dawn that the move was aimed at achieving maximum self-sufficiency in energy by increasing oil and gas production. An official at the ministry said that the E&P companies would be offered $4.08 per mmbtu for gas under the Petroleum Policy 2009. The rate was $3.65 per mmbtu in 2007 and $2.99 per mmbtu in 2001.

The corporate social responsibility (CSR) and other taxation have also been increased in the new policy as the E&P companies would pay 12.5 per cent royalty and 40 per cent income tax to the government.

An official of Pakistan Exploration and Production Companies Association (PEPCA) said that all the 15 E&P companies were likely to participate and the maximum number of bids were to be filed by the state-owned upstream companies Oil and Gas Development Company (OGDCL) and the Pakistan Petroleum Limited (PPL).

He said that the new policy was based on work units as opposed to the previous policies where the companies used to file bids on work and financial commitments.

‘Drilling of one well takes around 1,000 work units and the average cost incurred at each work unit was $10,000,’ said a senior member of an E&P firm and added that this policy would be advantageous for smaller companies who were able to limit their work loans to seismic studies and other jobs required prior to drilling of wells.

‘Even the cost of seismic study was around $20,000 per kilometre and if their finds are positive these companies may enter into partnership with large multinational in later stages,’ the official said.

The government has set a drilling target of 100 oil and gas exploratory wells in 2009-10 as compared to the current number of around 45 wells.

The country has around 170 operational blocks but around two dozens of them mainly in the NWFP and Balochistan are out of bound or the operators are forced to limit their activities due to law and order. links.....