Calling it a day: Canadian oil and gas firm decides to quit Pakistan

Canadian oil and gas firm decides to quit Pakistan

ISLAMABAD:  Canadian oil and gas exploration firm Niko Resources (Pakistan) Limited (NRPL) has decided to pack up and quit Pakistan apparently because of low wellhead gas prices that make it difficult to sustain operations.

NRPL, a subsidiary of Canada’s Niko Resources Limited, was exploring hydrocarbons in four offshore blocks in Indus namely Indus-X, Indus-Y, Indus-Z and Indus North. The company has collected 2,000 square kilometres of 3-D seismic data in these blocks.

“Now, Niko Resources has served a notice, announcing its decision to quit these four blocks and wind up the company in Pakistan,” an official said.

Niko is a Calgary-based independent international oil and gas company with operations in India, Bangladesh, Indonesia, Kurdistan, Trinidad, Madagascar and Pakistan.

It is one of the fastest growing companies in the industry with market capitalisation of over $5 billion in the Toronto Stock Exchange under the symbol NKO. The government of Pakistan had awarded the four blocks to Niko in March 2008 for offshore drilling.

According to sources, low wellhead gas price for offshore fields was one of the key reasons which forced Niko Resources to stop operations in Pakistan.

“Drilling of an onshore well requires expenditure of $15 million whereas an offshore well needs spending of $80 to $100 million,” a source said, adding exploration companies working on offshore fields had been demanding more incentives to make drilling for oil and gas economically viable.

Sources revealed that Canadian High Commissioner to Pakistan met Federal Petroleum and Natural Resources Minister Shahid Khaqan Abbasi in the first week of July. During the deliberations, Abbasi asked the high commissioner to persuade Niko Resources to take back its decision of leaving Pakistan as the government “is now offering incentives for offshore drilling.”

In the new Petroleum Policy 2012, the price of gas discovered in the Offshore Shallow Zone will be $7 per million British thermal units (mmbtu), for Offshore Deep Zone the price will be $8 per mmbtu and for Offshore Ultra Deep Zone the price will be $9 per mmbtu.

A bonanza of $1 per mmbtu has also been announced for the first gas discovery in the offshore field.

Abbasi told the diplomat that Pakistan had huge reserves of natural resources and there were ample opportunities for investment in the oil, gas and mineral sectors. “We welcome Canadian investment and technical support in the oil and gas sector in Pakistan,” he said.

Pakistan has a vast onshore and offshore sedimentary area covering 827,268 square kilometres, of which around 30% is being explored.

Owing to existing opportunities, transparent and predictable policies and presence of major international exploration firms like ENI and BHP, there is vast potential of investment in Pakistan, Abbasi said.