KARACHI Jul 05, 2007 (Dow Jones Newswires)
Pakistan's government Thursday granted an offshore petroleum exploration license to state-run Government Holdings (Private) Ltd. for an offshore block in the Arabian sea, the Ministry of Petroleum and Natural Resources said.
The block, Eastern Offshore Indus-A, covers an area of 2,500 square kilometers.
"The Government Holdings would share exploration activity with (state-run) Oil and Gas Development Co. Ltd.," the ministry said in a statement.
Oil and Gas Development Co. (OGDC.KA), the country's largest listed firm, will invest $2.72 million during the first two years of the initial term of the license.
As Pakistan imports more than 80% of its energy requirements, including about $3 billion worth of crude a year, the government has been encouraging domestic and foreign firms to increase exploration activities in the country.
In recent years, the policy has attracted a number of foreign firms in the exploration and production of hydrocarbons, making it one of the largest foreign investment areas.
Still, global oil majors have been cautious about investing in Pakistan as most offshore wells drilled in the country by foreign firms have turned out dry.
Total, Pakistan Petroleum Ltd and Premier Oil Pakistan made unsuccessful attempts in the past few years to find hydrocarbons in deep water off Karachi.
The country is still struggling to increase domestic oil production to about 65,000 barrels a day. It hopes to produce 100,000 barrels a day within five years.
Pakistan also produces a little over 3.5 billion cubic feet of natural gas a day, which meets 50% of its total needs.
The government has set a target of drilling 100 exploratory wells each year, compared with an average of 60 a year previously.
According to official estimates, Pakistan has 27 billion barrels of estimated oil reserves, of which only 3% has been explored.
It also has an estimated 280 trillion cubic feet of natural gas reserves, of which only 42% has been explored so far.
Copyright (c) 2007 Dow Jones & Company, Inc.
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