SINGAPORE Sep 6, 2007 (Dow Jones Newswires)
U.K.-based Premier Oil (PMO.LN) plans to expand its oil and gas production activity in Pakistan while it concludes a demerger agreement with Kuwait Foreign Petroleum Co., or Kufpec, said a senior Premier Oil official.
The company, which in late July announced it and Kufpec were going separate ways in Pakistan, is eyeing oil and gas blocks being offered by Pakistan's petroleum ministry, Zahid Mir, Production and Asset Manager at Premier Oil in Pakistan told Dow Jones Newswires recently.
"We were in the process of demerger, so new activity was not initiated. The program now is to grow in Pakistan independently. (The) Plan is to grow by possible exploration and acquiring production," Mir said.
Premier is one of the largest independent oil and gas production companies in Pakistan. Its oil and gas fields there constitute one-third of Premier Oil's total oil and gas assets worldwide.
It also has producing interests in North Sea, Indonesia and Mauritania, among others.
Mir said that though Premier hadn't yet bid for any blocks offered by the government in its latest exploration round, it was evaluating whether to do so.
"We are willing to expand in Pakistan if you (the Pakistan government) bring in acceptable terms," Mir said.
In the meantime, Premier and its partners are boosting gas output at five onshore fields in which it has stakes, Mir said. Premier also has a stake in an offshore oil field where drilling will start shortly.
Premier receives about 12,150 barrels of oil equivalent per day from the onshore fields - Kadanwari, Zamzama, Bhit & Badhra, Qadirpur and Zarghun South.
Pakistan's domestic crude output is a meager 60,000 barrels a day, although the crude reserve estimates exceed 300 million barrels, according to the U.S. Energy Information Administration.
The country also had 28 trillion cubic feet of proven natural gas reserves in 2006 and produced 968 billion cubic feet in 2004.
Pakistan's two state-owned companies Pakistan Petroleum Ltd. (PPL.KA) and Oil & Gas Development Co. Ltd. (OGDC.KA) together account for 55% of domestic natural gas output.
Increased Gas Output
The joint venture with the Kuwait company dates back to September 2001, when half of Premier Oil's assets in Pakistan were sold to Kufpec.
"The joint venture worked well without any major problems. But the demerger has happened due to different philosophies for growth in Pakistan," Mir said.
An industry analyst in Pakistan said that there was a "disalignment in growth strategies" as while one company was interested more in commercial production and acquisition, the other was keen on building an exploration base.
Output at the Zamzama gas field will be boosted by 150 million cubic feet per day, and output at the Qadirpur gas field by 100 million cubic feet or 20% by next March, Mir said.
Despite Premier's minority stake position in the fields, the company has made significant investments. As part of the gas output expansion at Qadirpur, Premier has invested US$150 million in a compression project to maintain reservoir pressure, Mir said.
"We are close to completing our new production facility to add 150 million cubic feet of gas at Zamzama and expect the first gas by September 15," Mir said.
Premier already has a supply agreement with Sui Northern Gas Co. for the additional gas output from Qadirpur and has signed a supply agreement for gas from Zamzama.
Additionally, it plans to enlarge the drilling area to commercialize more reserves in the Bhadra field, and is likely to complete the project by end of this year.
Premier also has a 12.5% stake in the a deepwater oil field in the Indus delta which contains an estimated 300 million barrels of crude oil and condensate.
Lead operator Royal Dutch Shell PLC (RDSA) plans to start drilling there in coming weeks.
Copyright (c) 2007 Dow Jones & Company, Inc.
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