Pakistan Petroleum reports 110 million-barrel oil discovery at Abu Dhabi offshore block 5

Pakistan Petroleum Ltd. (PPL) said it has identified potential reserves of 110 million barrels of oil at Abu Dhabi Offshore Block 5, with its pro rata share estimated at 11 million barrels. Production from the block is expected to begin in fiscal year 2028-29, company management told analysts.

The state-run exploration and production firm said it is in talks to acquire nearby exploration blocks adjacent to Offshore Block 5 as part of its strategy to expand its international portfolio. PPL also expressed optimism about the Eastern Offshore Indus C Block, a joint venture with Turkish Petroleum Overseas Company, calling it a “strategic collaboration” with promising results expected.

The company plans to drill 12 wells in fiscal year 2026 across frontier and offshore regions, including four development wells.

Drilling activity in frontier regions, such as the Suleiman Belt in Balochistan, is planned for fiscal years 2026-27. PPL expects to spud an offshore well by the first quarter of FY27.

The Lal X-1 well is currently in testing, with its potential to be assessed after drilling two to three more wells.

Gas production and financials

PPL’s gas production stood at 204,853 million cubic feet (mmcf) in FY25. Management said output could have been 10% higher if not for production curtailments caused by excess re-gasified liquefied natural gas (RLNG) in the system, which reduced production by about 73 million cubic feet per day (mmcfd). The company estimated lost revenue of around PKR 20 billion for the year.

By the end of FY25, PPL’s cash and short-term investments totaled PKR 80 billion, down from PKR 112 billion the previous year, primarily due to payment of a Sui lease extension bonus.

In the first quarter of FY26, recovery from Sui Southern Gas Company (SSGC) improved to 100%, compared with 82% in FY25. However, recovery from Sui Northern Gas Pipelines Ltd. (SNGPL) fell to 84% from 95% a year earlier.

Management said it remains confident that the government will resolve the gas sector’s circular debt, similar to the power sector’s recent progress.

Third-party sales and diversification

PPL is negotiating gas sales with 10 third-party companies, though management said transmission-grade and infrastructure limitations, especially pipeline constraints, continue to pose challenges.

The company said its diversification into mining is gaining traction amid Pakistan’s evolving energy landscape, led by the Barite-Lead-Zinc project, which is expected to drive future growth.

Discoveries and dividends

PPL announced multiple discoveries during FY25, including two operated finds—such as the Pateji X-1 well in Sindh’s Shahbandar Block—and six in partner-operated assets. The company drilled 11 exploration and four development wells across its portfolio.

“We are proud to share that production from Pateji X-1 started in a record time of less than five months,” management said. Additionally, Adhi South 8 & 9 and Jhim East X-1 were brought online during the year.

Despite LNG-related supply restrictions and lower offtakes from Kandhkot, PPL’s average production remained around 632 million standard cubic feet per day equivalent.

The company also improved its dividend payout ratio to 22% in FY25, with a dividend per share (DPS) of PKR 7.5, up from an 18% payout ratio the previous year.