Pakistan's OGDC plans to drill 3 tight gas wells this year

Oil and Gas Development Company Limited (OGDCL) plans to drill three tight gas wells this year, in addition to Nur West-1, which was added under the tight gas policy in July, its Chief Financial Officer (CFO) Muhammad Anas Farook said at Pakistan Energy Conference 2024 hosted by Topline Securities on Thursday.

Pakistan’s untapped tight gas reserves are estimated at 35 to 70 trillion cubic feet (tcf).

OGDC drilled 13 wells in fiscal year 2023-24 (FY24), out of the total of 60 wells drilled by the industry.

Farooq informed that there is a natural decline of 7-8% in oil and 10-12% in gas production. However, OGDCL has managed to improve production in current year and production optimization activities are ongoing, which are expected to further enhance production in the medium term.

In Abu Dhabi Block-5, OGDCL has completed drilling two appraisal wells and is currently drilling an exploration well. The feasibility study for the Reko Diq project is expected to be finished by December, with ongoing project financing activities.

OGDC CFO said for FY24, OGDC's oil production was 33,117 barrels per day, and without curtailments, it would have been 33,495 bpd. Gas production was 717 million cubic feet per day (mmcfd), but would have been 771 mmcfd without curtailments.

Pakistan's total oil reserves are 243 million of barrels of natural gas liquids, oil and condensates, with OGDCL holding a 51% share. In gas, the reserves are 18,472 billion cubic feet, with OGDCL holding a 32% share.

Farooq said the policy to sell 35% of gas from new fields to a third party is still awaiting approval from the Cabinet Committee on Energy.

In the past, OGDCL discovered low BTU gas in ZIN but did not produce it due to commercial viability. Management is now considering options to bring ZIN gas to UCH, though it will take medium to long term.

OGDC’s cash collection ratio improved to 121% in 1QFY25. Management expects this pace to continue at 90-100% of billing, anticipating timely gas price adjustments under the IMF program. Management also indicated potential improvements in dividends, depending on the board's decision.