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Oil, Gas and Refinery Projects update

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Pakistan seeks spot LNG cargoes, inks supply deal with Azerbaijan​

Reuters
June 13, 2023

The federal government issued two tenders seeking spot liquefied natural gas (LNG) cargoes for the first time in nearly a year on Tuesday, while also announcing a deal that will see Azerbaijan provide the country with one LNG cargo per month.

Dependent on gas for power generation and running short of foreign exchange to pay for imports, the country has struggled to procure spot cargoes of LNG after global prices spiked last year following Russia’s invasion of Ukraine, leaving it to face widespread power outages.

But Asian spot LNG prices this year have eased from record highs of $70 per million British thermal units (mmBtu) hit in August, and are now trading below $10.

Pakistan LNG, a government subsidiary that procures LNG from the international market, has one tender seeking six cargoes on a delivered-ex-ship (DES) basis to Port Qasim in Karachi in October and December, according to the tenders posted online.

The delivery windows are October 5-6, 20-21 and 31, and December 7-8, 13-14 and 24-25. The tender will close on June 20.

Pakistan LNG’s second tender seeks three cargoes, also on DES basis to Port Qasim, for delivery windows of January 3-4, 28-29 and February 23-24. The second tender closes on July 14.

Pakistan LNG last issued a tender seeking 10 spot cargoes in July 2022, but received no offers.

Separately on Tuesday, Minister of State for Petroleum Musadik Malik told a news conference that Azerbaijan will supply an LNG cargo every month to Pakistan at a “cheaper price”.

He did not share details on the supply deal, but said that a contract had already been signed with Azerbaijan and that it will “start soon”.

Pakistan has two long-term supply deals with Qatar, one signed in 2016 for 3.75 million metric tons of LNG a year, and another signed in 2021 for 3m metric tons a year.

It also has an annual portfolio contract with ENI for 0.75m metric tons a year.

In 2022, Pakistan’s imports of LNG slowed to 6.93m metric tons for the year, down from 8.23m metric tons in 2021, according to data from data analytics group Kpler.
 
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OGDCL revives Jhal Magsi gas project​

Mon, 3 Jul 2023, 4:45 PM

OGDCL revives Jhal Magsi gas project

ISLAMABAD, Jul 3 (APP):In a significant move towards meeting the country’s growing energy demands, Oil and Gas Development Company Limited (OGDCL), the leading exploration and production company in Pakistan, has revived Jhal Magsi gas project.
The state-of-the-art gas processing plant, with a daily capacity to produce 13.7 MMSCF process gas and 45 BBL/day condensate, will mitigate escalating energy needs of Pakistan, said a news release issued here on Monday.
The installation of this plant is a testament to OGDCL’s commitment to furthering the exploration and production of oil and gas resources in the region.
Besides the commercial operations, the company has underscored its dedication to transforming the lives of the local community in Jhal Magsi through a series of social welfare initiatives in the areas of education, health, water, and infrastructure.
As part of its efforts to enhance healthcare facilities, the OGDCL has provided ambulances to the District Headquarter Hospital (DHQ) in Jhal Magsi.
Additionally, the OGDCL has installed a Reverse Osmosis (RO) plant, recognizing the importance of clean drinking water.
The OGDCL is actively contributing to the socioeconomic development of Jhal Magsi district by combining their commitment to meeting the country’s energy requirements with community-focused initiatives.
Their multifaceted approach, dedicated to securing a reliable energy supply and enhancing the quality of life for residents, is a significant milestone in Pakistan’s pursuit of energy security and sustainable progress.
The OGDCL’s installation of the gas processing plant, along with their community development endeavors, showcases their dedication to the welfare of the local population and sets an example of responsible corporate citizenship in the country.




https://twitter.com/x/status/1675780088246448128
 
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Pakistan has forcefully dismissed the notion being floated in social media that Russian crude oil was refined in an Indian refinery before being sent to Karachi Port.

Pakistan Refinery Limited (PRL), which is processing the Russian crude, has turned down the rumours doing rounds in social media about the purported processing of Russian oil, meant for use in Pakistan, at an Indian refinery.

Talking to The Express Tribune, PRL Managing Director Zahid Mir said that Pakistan had purchased Urals-grade crude directly from Russia.

He elaborated that PRL signed a contract for supply of 100,000 tons of Urals crude oil, which was loaded at a Russian port and offloaded at an Omani port on two small shuttle vessels for onward shipment to Karachi Port.

According to the plan, both shuttle vessels arrived at Karachi Port and delivered the cargo, he said, adding that technically crude oil did not require any refining before its sale. “Therefore, the talk of crude refining at an Indian refinery is completely absurd.”

Mir revealed that the procured Russian crude was being processed at PRL and a comprehensive report would be submitted to the government after the completion of processing.

Government officials insist that the import of Russian oil is part of a strategy to boost diplomatic relations with Moscow through oil diplomacy.

Pakistan has so far been banking on Middle Eastern oil supplies and the purchase of Russian oil has opened a new avenue for energy import from diversified markets.

According to sources, the Russian oil is cheaper when compared with the Gulf oil market, which will encourage Pakistan to ink a long-term supply deal with Russia.

“Once PRL submits its report on the ratio of petroleum byproducts extracted from the Russian oil and the economics of consuming this oil, then the Pakistani government will make decision on a potential long-term deal with Moscow,” a source said.

Russian crude is said to be containing a higher ratio of furnace oil, which Pakistan’s major oil consumers have already abandoned.

Refineries in the country have been facing problems for a long time in finding customers for furnace oil after power plants switched to liquefied natural gas (LNG).

Of late, they are opting for furnace oil exports, even at a loss, to dispose of heavy volumes. Pak Arab Refinery Limited (Parco) and PRL have exported furnace oil at a loss of around Rs30,000 per ton.

Pakistan started importing LNG in 2015 during the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government. However, the then government did not conduct due diligence for the use of furnace oil.

Since that time, the local refineries have been in trouble and announced partial shutdown several times.

The government should make a decision keeping in view the production of petrol, high-speed diesel and furnace oil and the economics of consuming Russian oil, sources said.

Russia offered Pakistan the option of paying for its oil in one of the three currencies, namely the UAE dirham, Chinese yuan and Russian ruble. Pakistan opened Letters of Credit (LCs) in the Bank of China to make payments due to dollar shortage and the US-Russia row over the Ukraine war.
 
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PRL, Air Link look to acquire majority stake, control of Shell Pakistan​

  • Next Capital, manager to the offer, submits public announcement of intention
BR
July 17, 2023

Pakistan Refinery Limited (PRL) and Air Link Communication (AIRLINK) have jointly expressed their intention to acquire the majority stake and control of Shell Pakistan Limited.

The development was shared by brokerage house Next Capital Limited, which was appointed manager to the offer, in a notice to the Pakistan Stock Exchange (PSX) on Monday.

“Next Capital Limited (Manager to the Offer) has submitted a Public Announcement of Intention (“PAI”) on behalf of Pakistan Refinery Limited (PRL) and Air Link Communication Limited (Air Link) on July 17, 2023, to acquire 77.42% shares and control of Shell Pakistan Limited by PRL and Air Link under the Securities Act, 2015 and the Listed Companies (Substantial Acquisition of Voting Shares & Takeovers) Regulations, 2017,” read the notice.

As per the PSX notice, the two companies intend to acquire 77.42% – 165.7 million shares – through an agreement, and another 11.29%, which translates into 24.16 million shares, through public offer.

This translates into a total potential acquisition of 88.71%.

Analysts said the 77.42% share is the stake offered by Shell Plc, the parent company of Shell Pakistan Limited.
 
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ghazi52 said:
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PRL, Air Link look to acquire majority stake, control of Shell Pakistan​

  • Next Capital, manager to the offer, submits public announcement of intention
BR
July 17, 2023

Pakistan Refinery Limited (PRL) and Air Link Communication (AIRLINK) have jointly expressed their intention to acquire the majority stake and control of Shell Pakistan Limited.

The development was shared by brokerage house Next Capital Limited, which was appointed manager to the offer, in a notice to the Pakistan Stock Exchange (PSX) on Monday.

“Next Capital Limited (Manager to the Offer) has submitted a Public Announcement of Intention (“PAI”) on behalf of Pakistan Refinery Limited (PRL) and Air Link Communication Limited (Air Link) on July 17, 2023, to acquire 77.42% shares and control of Shell Pakistan Limited by PRL and Air Link under the Securities Act, 2015 and the Listed Companies (Substantial Acquisition of Voting Shares & Takeovers) Regulations, 2017,” read the notice.

As per the PSX notice, the two companies intend to acquire 77.42% – 165.7 million shares – through an agreement, and another 11.29%, which translates into 24.16 million shares, through public offer.

This translates into a total potential acquisition of 88.71%.

Analysts said the 77.42% share is the stake offered by Shell Plc, the parent company of Shell Pakistan Limited.
Click to expand...

Why is Airlink, a telecom manufacturer getting into downstream O&G?

Are they diversifying? Do they already have investements in other sectors?
 
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PLL, Azerbaijan’s SOCAR ink framework agreement to procure LNG cargoes​

Pakistan LNG Limited (PLL) and SOCAR Trading Company, an international marketing and development arm of the State Oil Company of Azerbaijan Republic, have inked a framework agreement to procure LNG cargoes.

The deal is part of Islamabad’s efforts to ensure energy security as the cash-strapped nation in recent months has failed to secure LNG bids from international markets amid high prices.

Under the framework agreement, SOCAR has offered LNG supply to Pakistan in the form of one cargo per month, on flexible terms and with a credit line for 30 days after delivery of the cargo on a one-year contract basis, which is extendable by another year.
 
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Conditions for $10b refinery project met​

MoU with Chinese firm for EPC contract signed, 70% equity raised via SOEs to meet conditions

Zafar Bhutta
July 28, 2023

ISLAMABAD: Pakistan has taken a significant step towards commencing the construction of the $10 billion refinery in Balochistan by reaching an agreement with a Chinese company on Thursday, granting it the construction rights for the project. The Pakistan State Oil (PSO) inked a Memorandum of Understanding (MoU) with the Chinese company to secure the engineering, procurement, and construction contract (EPC), a crucial requirement set by Saudi Arabia for its $3 billion equity investment in the refinery project.

The investment in the new refinery project was linked to the requirement of raising equity by Pakistani companies and awarding the Engineering, Procurement, and Construction (EPC) contract.

The collaboration involves four leading Pakistani state-owned entities: Oil and Gas Development Company Limited (OGDCL), Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL), and Government Holdings Private Limited (GHPL). Through a joint investment strategy, these companies will work together on the Greenfield Refinery Project, with significant foreign investment from world-class oil and gas giants through equity participation.

The integrated refinery petrochemical complex is envisioned to have a crude oil processing capacity of at least 300,000 barrels per day (bpd) along with a petrochemical facility in Pakistan. The project will include various components such as marine infrastructure, a petrochemical complex, crude oil storages, refined utilities, and pipeline connectivity.

Secretary of Petroleum, Captain (R) Muhammad Mahmood highlighted the importance of the Greenfield Refinery Policy and reaffirmed the Petroleum Division’s commitment to the development and growth of the petroleum sector.

Minister of State for Petroleum, Musadik Masood Malik emphasised the benefits of the project to the national economy, including economic growth, foreign exchange savings, energy security, employment opportunities, and social upliftment.

Saudi Arabia’s willingness to inject the initial equity into the project has led the Pakistani government to consider a joint venture with key state-owned companies. PSO will contribute up to 30% equity, with Saudi firm Aramco injecting the initial 30% and the remainder will be contributed by the other SOEs.

The establishment of the refinery is expected to significantly decrease the country’s trade deficit. Savings are anticipated, as Pakistan currently pays a premium of $18 to $20 per barrel on diesel imports and a premium of $1 to $2 per barrel on crude oil imports.

In addition to the collaboration with Saudi Arabia, the Pakistani government is engaged in negotiations with other friendly countries, including the United Arab Emirates, for the import of cheap oil and gas. Several other member countries of the Gulf Cooperation Council have shown interest in the mega refinery project.

However, the government official clarified that the terms and conditions of the project are yet to be finalised, and this will be done after the Final Investment Decision (FID) is made, which may take around one to two years.

The minister added that natural gas worth $570 million has been added to the gas system, with an additional $500 million of indigenous gas production soon to be included. Agreements with Russia for crude oil will bring further dividends, and talks have resumed on the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline project. Furthermore, a framework agreement with Azerbaijan for LNG procurement on flexible terms has also been signed.
 
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Pakistan wants a better deal on Russian oil after trial imports proved uneconomical, informed sources and experts say, despite official assurances that the arrangement has been a success.

Then there is the transport concern: Russian oil sent in supertankers has to be first unloaded in Oman and then transported to Karachi on smaller vessels, as such large ships cannot dock at Pakistani ports. While the specific pricing details of Pakistan's deal with Russia have not been disclosed, Khan said that "the middle-men in the transport supply chain were making [a fortune], which rendered the final price of the Russian oil for Pakistan only a couple of dollars less than the Arabian oil."

Khan said importing Russian oil will only work if Pakistan can get a steeper discount. "Russia is yet to offer a properly agreed discount in case of a long-term agreement with Pakistan," he added.

Aftab Zafar, an oil adviser based in Islamabad, offered a similar assessment. "Pakistan did not get as much discount on Russian oil imports as China or India are getting," he said. He contended that Pakistan expects an additional 5% to 10% off.

Still, Zafar suggested Pakistan would not suspend the imports right away. "Pakistan might go for two more trial cargoes and make a final decision about the future of oil imports in mid-2024," he said.

Pakistan does appear to have its eye on a future with oil from Russia, which has been seeking new markets since its rift with the West over the invasion of Ukraine.

Pakistan recently signed a memorandum of understanding with Saudi Aramco to build a $10 billion oil refinery in Gwadar, a port city considered the heart of China's Belt and Road Initiative projects in the country. It was understood that once built, the proposed refinery would be used to refine Russian crude.

The government officials who spoke with Nikkei said it could still work out that way. They said the Gwadar refinery would take years to build. "By that time, Pakistan expects to find ways to import Russian crude with higher discounts, while resolving transportation and technical refining issues," one official said.
 
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MARKETS

OGDCL’s KP well sees major boost in production​

August 30, 2023

Oil & Gas Development Company Limited (OGDCL), the country’s largest hydrocarbon exploration firm, has achieved a significant production enhancement at its Siab-1 well, located in Khyber Pakhtunkhwa (KP).

The well is part of the Baratai Block located in Kohat district, KP, shared OGDCL in a notice to the Pakistan Stock Exchange (PSX) on Wednesday.

“The well operates under a joint venture, where OGDCL is the operator, holding 97.5% stake, and the Khyber Pakhtunkhwa Oil & Gas Company Limited (KPOGCL) holds 2.5% share,” read the notice.

The company shared that since its production commencement on January 13, 2022, the Siab-1 well has recorded flow rates of 125 BPD (barrels per day) of condensate and 6.2 Million standard cubic feet per day (mmscfd) of gas at a well head flowing pressure (WHFP) of 1700 PSI from the Lockhart formation.

The well is operated through the OGDCL Dhok Hussain Field, it said.

“As a result of successful implementation of production enhancement strategy through a rigless intervention in the Lockhart formation, a substantial increase in hydrocarbon production has been achieved with an additional production of 265 BPD of oil and 14.3 mmscfd of gas at a WHFP of 4300 PSI,” said OGDCL.

The company said additional gas production is being injected into the Sui Northern Gas Pipelines Limited’s network.

It added that the enhanced production from the well commenced on August 28, 2023. “The cumulative production from the well is now 20.5 mmscfd gas and 390 BPD oil,” OGDCL stated.

Last month, OGDCL registered a significant increase in oil and gas production from four of its wells located in Sind
 
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Oil & Gas Development Company Limited (OGDCL), the country’s largest hydrocarbon exploration firm, has commenced hydrocarbon production from its new development well Nashpa-11.

The E&P firm announced the development in its notice to the Pakistan Stock Exchange (PSX) on Tuesday.

“We are pleased to share an encouraging development where the Nashpa-11 well has been successfully tested, completed, and brought into the production stream,” read the statement.

“This development is the result of OGDCL’s in-house expertise,” it added.

Sharing details, OGDCL said that the Nashpa-11 well was drilled to a depth of 4,485 meters, targeting the hydrocarbon potential within the Lumshiwal, Hangu, and Lockhart formations.

“Presently, these formations are yielding 830 BPD of oil and 1.0 MMSCFD of gas through a 32/64” choke at a wellhead flowing pressure (WHFP) of 520 PSI,“ said OGDCL.

The company shared that as of September 11, 2023, the well has been connected to the OGDCL Nashpa plant through a 1.8km flow line, and gas is being injected into the Sui Northern Gas Pipeline Limited (SNGPL) network.

Nashpa well is part of Nashpa Block which spans Khyber Pakhtunkhwa and the Punjab.
 
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