With ExxonMobil Acquiring 25 Pct Stake In Offshore Drilling in Pakistan, Shale Gas, Oil Could Get Major Boost
Shale oil and gas presents a new outlook for Pakistan which has world’s 9th largest shale gas and oil reserves far greater than total resources available in Central Asian states
May 30, 2018 (BE2C2) — In a major development, US energy giant ExxonMobil has acquired 25% stake in offshore oil and gas drilling in Pakistan.
An agreement in that regard was signed at the Prime Minister’s Secretariat in Islamabad on Monday among ExxonMobil, Government Holdings Private Limited (GHPL), PPL, Eni and OGDC.
Earlier, Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and Italian energy firm Eni had 33% stake each in offshore drilling in the country. With ExxonMobil acquiring 25% shareholding, the shares of all partnering companies will dilute to 25% each.
Officials believe ExxonMobil will help bring state-of-the-art offshore drilling technology to Pakistan which will help boost the country’s major initiative to tap its huge shale gas and shale oil reserves in the lower and middle Indus basin.
Syed Rashid Husain, a renowned Canada-based oil & gas analyst told BE2C2/PKONWEB, “Getting Exxon involved in Pakistan could be ‘real’ game changer. This also indicates the shale potential of the country. However, water scarcity and environmental considerations need to be taken in the loop seriously. Pakistan has definite potential. It is waiting to be exploited properly. One could hope at this stage, that despite having only 25 percent shareholding, equivalent to other stakeholders, Exxon would be allowed to play a lead role – from a technical viewpoint. For they have the technical expertise.”
Offshore drilling has already brought a revolution in the US oil and gas market and even shaken the monopoly of Organization of Petroleum Exporting Countries (OPEC) – a global grouping of major oil producers and exporters.
The US oil giant has been working with latest technology on oil and gas exploration in different countries and Pakistan has now become part of its expansion plan.
Pakistan already has the basic technology required for shale gas exploration like horizontal drilling and hydraulic fracturing and being used for conventional and tight gas reservoirs.
The country has world’s 9th largest shale gas and oil reserves which are far greater than the total resources available in Central Asian states.
Pilot projects likely to be executed in select areas of Balochistan, Sindh and Khyer Pakhtunkhwa will help assess the cost of extracting Shale gas and oil after identification of massive technically recoverable reserves in potential areas.
The move comes as the US Agency for International Development (USAID) in 2015 estimated that Pakistan had massive deposits (10,159 trillion cubic feet) of shale gas and 2.3 trillion barrels of shale oil in the lower and middle Indus Basin – figures that were several times higher than those released by the US Energy Information Administration (EIA) in 2013 and 2011.
The USAID’s study geographically covered areas spread over Sindh, southern parts of Punjab and eastern parts of Balochistan.
Earlier assessment by EIA in June 2013 had figured presence of shale gas to 586 trillion cubic feet, of which 105 trillion cubic feet were technically recoverable. The EIA had also seen the presence of 9.1 billion barrels of shale oil that were technically recoverable out of estimated deposits of 227 billion barrels.
But the 2015 study conclusions termed the deposits a ‘game-changer’ and future source for abundant petroleum products in the country.
Though new technology will be available with available ExxonMobil’s entry in the country’s shale prospecting market, environmental concerns, requirement of huge quantity of water and high cost of drilling are real challenges, the USAID and EIA reports said. A well requires three to eight million barrels of water. Pakistan has water supplies, but the real issue is its disposal.
Estimates suggest shale gas will cost $10 per million British thermal units, which will come down with the increase in recovery of untapped reserves.
In two to three years time, shale gas and shale oil could possibly become another game-changer for Pakistan’s energy needs and supplement its energy mix presently skewed towards imported oil and LNG, several experts said.
Meanwhile, Bank of America Merrill Lynch has warned Brent could hit $100 a barrel by next year. So Exxon’t entry is timely and beneficial, experts said.
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