Pakistan Awards First Offshore Oil Exploration Blocks in Decades

Pakistan has taken a significant step in its energy sector by awarding 23 offshore oil exploration blocks to four consortiums. This marks the country’s first bidding round for offshore exploration in nearly two decades. The announcement came from the Ministry of Energy on March 15, 2024, stating that bids were awarded for 23 of the 40 offshore blocks that were offered, covering approximately 53,500 square kilometres.

The consortiums awarded the contracts are led by major local energy companies, including the state-run Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Mari Petroleum. They are joined by Prime Energy, a privately-owned firm supported by Hub Power Company (Hubco).

Among the international participants, Turkey’s national oil company, TPAO, secured a 25 per cent stake in one of the awarded blocks and the operational rights following a joint bidding agreement with PPL earlier this year. Other notable partners include Hong Kong-based United Energy Group, Orient Petroleum, a significant local independent producer, and Fatima Petroleum, part of the Fatima Group conglomerate.

Investment and Potential

The four winning consortiums have collectively committed approximately $80 million for exploration work over an initial three-year period, according to the Ministry of Energy. Should drilling operations proceed successfully, total investments could escalate to between $750 million and $1 billion.

Pakistan’s offshore zone, covering about 300,000 square kilometres and bordering energy-rich nations such as Oman, the United Arab Emirates, and Iran, has a limited drilling history. Since gaining independence in 1947, only 18 wells have been drilled, which is insufficient to thoroughly evaluate its hydrocarbon potential.

The country, which currently imports around half of its oil, is eager to rekindle foreign interest in its offshore resources. This interest comes on the heels of the failed exploration at the Kekra-1 well in 2019, which led to the exit of major U.S. firm Exxon Mobil from the region.

As Pakistan moves forward with these exploration efforts, the outcome could significantly impact its energy landscape and reduce reliance on oil imports, potentially positioning the country as a more self-sufficient energy producer in the coming years.