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Pakistan Exploration & Production: Offshore Drilling If Successful; A Possible Game Changer for OGDC & PPL

• Pakistan Exploration & Production (E&Ps) companies along with international partners have ventured into offshore territory of underexplored but promising Indus G-Block for a deep-sea drilling endeavor. The operator of the block, ENI (an Italian company working in Pakistan’s upstream sector since 2000) has chartered Saipem 12000 rig/ship to drill the exploration well, located 230 kilometers southwest of Karachi in the water depth of more than 1,300 meters.
• The endeavor is a Joint Venture (JV) formed by ENI, ExxonMobil (American company that has come back to Pakistan after nearly 3 decades), Oil and Gas Development Company (OGDC), and Pakistan Petroleum (PPL) to spud the Kekra-1 exploration well in Indus G block (rigs reached Karachi’s coastal lines and drilling may have already begun). The exploration cost is estimated at US$70-80mn, to be contributed equally by the JV partners.
• All eyes are fixated on the said exploration endeavor with companies and Govt. officials calling it a possible ‘Game Changer’ for Pakistan (the Country which meets up to 49% of its oil & gas need, in barrels of oil equivalent, through local production). Some calling the anticipated discovery to be even bigger than the Sui field (currently second biggest gas field after Mari with current production at around 400mcfd or ~10% of total gas production) as the block is estimated to be rich in gas reserves, as per channel checks.
• Prime Minister Imran Khan in one of his interviews to journalists also stressed the significance of this offshore drilling. Any substantial discovery can be a good catalyst for Pakistan E&Ps (especially OGDC & PPL) as well as for attracting foreign investment into the sector. Further, it will also provide some respite to Pakistan’s depleting oil & gas reserve life which are estimated at 11 years & 14 years, respectively.