Pakistan’s oil and gas production saw a decline in the first quarter of the current fiscal year, with oil output down 8% and gas production falling by 7%.
The decrease was attributed to annual turnarounds (ATAs) and forced curtailments at several major fields, according to a report by Arif Habib Limited (AHL).
Key oil fields, including Nashpa, Mela, Dhok Sultan, Adhi, Makori East, and Pasakhi, experienced the largest declines in output. On the gas side, fields such as Sui, Qadirpur, Uch, Nashpa, and Naimat West were among those most affected by reduced production.
During the quarter, local exploration and production (E&P) companies spudded six exploratory wells and nine appraisal/development wells, falling short of the target of 27 exploratory wells and 40 appraisal/development wells for the fiscal year. Despite the production challenges, nine new discoveries were made, including the Razgir, Chak 202-1, and Baloch-2 wells.
The AHL report also projected a drop in earnings for Pakistan Oilfields Limited (POL), which faced a 6% decline in oil production and a 4% drop in gas output year-on-year. The company also grappled with a 6% fall in realized oil prices, a 5% appreciation of the rupee, and rising exploration costs.
Oil & Gas Development Company Limited (OGDC) is expected to see a decline in earnings due to a 3% drop in oil production and a 13% decrease in gas output, compounded by a 10% fall in oil prices and currency depreciation.
Exploration costs across the sector are projected to rise by 57% year-on-year, driven largely by the dry well Tando Allahyar NE-1. Meanwhile, earnings for Pakistan Petroleum Limited (PPL) are expected to shrink due to an 11% and 7% year-on-year drop in oil and gas production, respectively, and rising exploration expenses. However, PPL is expected to benefit from a 41% increase in other income, due to better returns on short-term investments.
In contrast, Mari Petroleum Company Limited (MARI) is projected to see earnings growth, supported by an 11% increase in gas production. Exploration costs for MARI are expected to decrease by 20%, reflecting lower seismic activity during the quarter.
The outlook for the sector remains cautious, with disruptions, rising costs, and lower production impacting earnings for the major players in the industry.
