KARACHI: Pakistan’s energy demand is expected to rise at a Compound Annual Growth Rate (CAGR) of six percent during the financial year 2011 to 2015. This is primarily due to a strong correlation between energy consumption and economic growth.
In addition, at the current production rate, Pakistan’s current oil and gas reserves would fully deplete in the next 13 and 19 years respectively, assuming that there is no further discovery. Recoverable oil and gas resource potential of Pakistan is estimated at 27 billion barrels of oil and 282 trillion cubic feet (TCF) of gas, while estimates suggest that discovered oil and gas reserves in the country stand at a meager three percent and 19 percent respectively.
Pakistan is still in the initial stage of exploration and has one of the lowest drilling density of 2.09 wells or 1,000 square kilometer and a higher success ratio of 30 percent. As of December 2009, exploration and production activities in the country have resulted in original recoverable reserves of 947 million barrels of oil and 54TCF of gas, and out of which, 303 million barrels of oil and 28TCF of gas are balance recoverable reserves.
Over the past five years (FY06 to FY10), gas production has grown at an average rate of 1.45 percent per annum to 4,060 MMCFD (million cubic feet of per day), and this slender increase is a result of sluggish growth witnessed in major producing fields such as Mari and Kandkhot, which contribute 16 percent to the total gas production of the country.
However, during the same period some other fields such as Miano, Sawan and Sui (25 percent contribution to total gas production of the country) have recorded a decline. The average gas production stood at 4,060 MMCFD during FY10 compared to 4,000 MMCFD in FY09, showing a modest annual increase of 1.6 percent.
The contribution of gas production by PPL, OGDC and POL remained at 23 percent, 22 percent and one percent respectively in FY10. The gas fields, which started operation in FY10, were Manzalai from Tal Block and Adam-1 from Hala Block. Working interest in Manzalai is 27.8 percent each for OGDC and PPL whereas for POL it stands at 21.1 percent. Adam-1 is 65 percent owned by PPL and 35 percent by Mari Gas.
In FY10, contribution from Manzalai and Adam-1 remained 4.4 percent. It is expected that the contribution to total gas production from these fields would rise to six percent in FY11 on account of a full year impact of these fields. Mari gas field, which contributes 12 percent to total gas production of Pakistan, exhibited an average growth of six percent in the past five years (FY06-FY10) and an annual 13 percent in FY10. On average, it produced 495 MMCFD for FY10.
Qadirpur, which contributes 12 percent to total gas production of Pakistan, posted an annual decline of nine percent in FY10 whereas from FY06 to FY10, its production remained stagnant at around 480 MMCFD. Gas production from Sui posted an annual decline of six percent in FY10 and 17 percent on average over the last five years. In FY10, its production hovered around 562 MMCFD compared to 677 MMCFD recorded in FY06.
Oil and Gas Development Company (OGDC) gas production in FY10 stood at 898 MMCFD compared to 932 MMCFD in FY09, recording an annual decline of four percent. This decline mainly emanated from Qadirpur and Uch gas fields, which cumulatively contributed 62 percent towards the total gas production of OGDC. Pakistan Petroleum Limited (PPL) gas production stood at 943 MMCFD in FY10 compared to 965 MMCFD recorded in FY09, registering an annual decline of two percent.
This is a result of an annual production decline of six percent from Sui gas field, which contributes around 60 percent (562 MMCFD) of the company’s gas production. FY10 was a year of turnaround for POL as its gas production exhibited an unprecedented annual rise of 60 percent to 60 MMCFD. The cause for this phenomenal rise was Manzalai field, which came online in November 09. Currently, this is contributing two third of total gas production of the company.
It is expected that the gas production would post an annual growth of six percent and reach 4,300 MMCFD in FY11. The production enhancement of 215 MMCFD would come from Maramzai, Mamikhel, Sinjhoro and Qadirpur fields. The production additions from these fields would be 20, 20, 25 and 150 MMCFD, respectively.
An investment analyst Shahbaz Ashraf believed that the E&P companies were well positioned to reap the benefits of growing energy demand and huge hydrocarbon potential, while strong balance sheets and favourable regulatory framework may help the local E&P companies to enhance their exploration and development activities. The energy CAGR previously stood at 8.4 percent during FY2006 to 2010, outpacing the GDP growth rate of 6.4 percent for the same period.
Currently, Pakistan satisfies 81 percent of its primary energy needs through oil and gas, while total demand of oil and gas in the country stands at 51 million tonnes of oil equivalent (TOE). The current production stands at 34 million while the residual is met through imports.
