MOL Halts Operations on Pakistan Tribal Threa

Hungarian oil and natural gas company MOL has stopped development work in Pakistan's North West Frontier Province following a tribal threat to blow up its assets, an official at a joint-venture company said Thursday.

MOL, in a joint-venture with three Pakistani companies, is involved in a $20 million gas pipeline project and exploration activities in the Tal Block in the region.

"They (MOL) have stopped the work following a threat from tribal elders to blow up the pipeline and other assets in the region," an official at a joint-venture company said. A MOL spokeswoman in Budapest later said the company plans to resume its operations soon.

"We've stopped the development work due to security reasons. But we're going to resume it very soon," the spokeswoman, Bea Lukacs, told Dow Jones Newswires.

Tribal threats and attacks on oil and gas installations are common in Pakistan's Sindh and Balochistan provinces where most multinational companies are involved in the exploration activity.

However, this was the first such threat in the North West Frontier Province, which shares a border with Afghanistan.

"The government and local tribes have reached an agreement over the dispute," Lucaks said without elaborating on locals' demands.

Officials said work on the Gurguri oil field and the laying of a pipeline in Aman Kot was stopped Tuesday following a warning by a grand council of 50 villages to attack and destroy the site if their demands aren't met.

"The locals want job and provision of gas in their areas. I think it's a politically motivated activity," an official at a local oil and gas company said.

The exploration activity was picking up in the province following a promising MOL-led discovery with an initial estimate of 1 trillion cubic feet of natural gas reserves.

Oil & Gas Development Co. (OGDC.KA), Pakistan's largest listed company and the nation's largest exploration firm, and Pakistan Petroleum Ltd. each have a 30% stake; Pakistan Oil Field (POL.KA) holds 25%; and Government Holding Ltd. holds 5%. MOL is the operator with a 10% stake.

MOL has been exploring for hydrocarbons in this block since 1999.

Analysts said a tribal threat could hamper the development of the field.

"The emergence of tribal threat isn't good for the province where we have one of the most promising gas fields," said Mohammed Sohail at Investcap Securities.