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'Oil, gas companies should benefit from Petroleum Policy 2012'

05 October, 2012

ISLAMABAD: Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said on Thursday that companies operating in the upstream oil and gas sector should take full advantage of the incentives offered in the Petroleum (Exploration and Production) Policy 2012 and in this regard assured facilitation from the government.

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ISLAMABAD: Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said on Thursday that companies operating in the upstream oil and gas sector should take full advantage of the incentives offered in the Petroleum (Exploration and Production) Policy 2012 and in this regard assured facilitation from the government.

While speaking at the ground-breaking ceremony of Latif Gas Field operated by OMV (Pakistan) at Sawan Plant in District Khairpur, Sindh, he expressed confidence that after the announcement of Petroleum Policy 2012, E&P companies are coming forward with new discoveries that would help in reducing gap between demand and supply of oil and gas in the country.

On this occasion, OMV also signed the Development and Production Lease Agreement for Latif Gas Field. OMV is the operator of Latif Concession and holds a 33.34 percent interest. The other partners in the joint venture are Eni (33.33 percent interest) and Pakistan Petroleum Ltd (33.33 percent interest).

The development would comprise of drilling of new wells, and construction of a 50 kilometres pipeline to transport Latif gas to OMV-operated Sawan gas plant where Latif gas will be processed and thereafter delivered to customers. OMV is targeting net production of 5,700 barrels of oil equivalent (BOE) per day from Latif in 2014.

Latif Gas Field was discovered in 2007 and started production under Extended Well Testing (EWT) arrangement in late 2008. It is located in the Sindh province in the Middle Indus Basin and is located next to the major OMV-operated plants in Miano, Kadanwari and Sawan.

Latif field has been fully appraised with the new 3D seismic and by drilling three appraisal wells. The field development will comprise of drilling and completion of four new wells, wellhead compression, construction of a new raw gas pipeline to connect Latif field with Sawan processing plant, and the construction of reception and metering facilities at Sawan.

The total investments for the Latif Gas Field developments are estimated to be 107 million euros ($142 million). It is planned to commence production from Latif Gas Field through Sawan plant in late 2013 with the aim to achieve a plateau production of around 100 million cubic feet per day (MMCFD) or 18,000 BOE per day.

Sawan plant is a state-of-the-art sour gas processing plant, which was constructed, and has been operated by OMV since 2003. Sawan field's own production is under natural decline, which will provide processing capacity for Latif gas production in Sawan plant. Sawan field will also benefit from this arrangement due to cost sharing that enables extension of field production beyond the economic cut-off associated with standalone production.

OMV Executive Board Member Jaap Huijskes, who's responsible for E&P said, “This is a clear win-win situation. Pakistan receives the confirmed Latif gas reserves at very low price even the incremental production will be delivered at prices well below competitive fuels.”

Nevertheless the new pricing as per 2012 policy for incremental production provides OMV and joint venture partners with sufficient incentives to make new investments to prove and develop new reserves, he said and added that on basis of this new commercial agreement OMV will drill immediately four development wells instead of two that were committed in the Field Development Plan.

It is worth mentioning that OMV (Pakistan) Exploration GmbH is a 100 percent owned subsidiary of OMV Aktiengesellschaft and started exploration activities in Sindh in 1991. The first significant gas discovery was made at Miano in the Sukkur district in eastern Sindh province in 1993, followed by Sawan discovery in 1997. Further discoveries, Latif and Tajjal gas fields, were made in 2007. In 2011 OMV closed the acquisition of Petronas Carigali Pakistan Limited, which provided access to the additional fields (Mehar, Rehmat, Saqib).

At present the OMV holds interest in eight exploration blocks in Pakistan, of which five blocks (South West Miano II, Gambat, Latif, Mubarak, and Mehar) are operated by OMV and three blocks (Harnai, Barkhan, and Kalat) are operated by two major national E&P companies.

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