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Namibia Offshore Exploration and Lessons for Pakistan
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Namibia Offshore Exploration and Lessons for Pakistan

Author saifenergy

Namibia Offshore Exploration and Lessons for Pakistan

Namibia’s offshore exploration history offers a remarkable case study for nations like Pakistan aiming to unlock their hydrocarbon potential. Both countries have faced challenges in establishing offshore oil and gas production despite promising geological settings. By examining Namibia’s approach and outcomes, Pakistan can identify actionable strategies to rejuvenate its offshore exploration efforts.

Namibia’s Offshore Exploration Journey: Key Phases and Insights

  1. Early Licensing Rounds (1969–1979)

Namibia initiated its offshore exploration in 1969, awarding eight blocks during the first licensing round. The Kudu Gas discovery (Kudu 9A-1) by Chevron, Regent, and SOEKOR marked the first gas find in the Orange Basin. However, UN sanctions in the late 1970s halted international participation, with rights transferred to the nascent national oil company, SWAKOR.

2. Renewed Exploration Efforts (1987–1990)

With collaboration from Halliburton, SWAKOR conducted seismic surveys and drilled additional wells (Kudu 9A-2 and 9A-3). Despite limited success, the groundwork was laid for modern exploration techniques and resource assessment.

  1. Post-Independence Licensing Rounds (1990s)
  • Namibia launched a series of licensing rounds from 1991 to 1999, awarding blocks to international players like Shell, Chevron, and Sasol.
  • Exploration activity surged with over 88,000 km of 2D seismic data collected and multiple exploratory wells drilled. While discoveries were elusive, critical insights into basin geology were gained.
  1. Open Licensing System and Modern Discoveries (1999–Present)

The adoption of an open licensing system in 1999 attracted numerous global operators, including Shell and TotalEnergies. Key outcomes included:

  • Enhanced seismic data acquisition with advanced 2D and 3D surveys.
  • Significant light oil discoveries in 2021/2022 by Shell Namibia (Graff-1) and TotalEnergies (Venus-1X.T1) in the Orange Basin.

 

Namibia Offshore Exploration and Lessons for Pakistan

Figure courtesy to NVENTURES.

Pakistan’s Offshore Exploration: Challenges and History

  1. Early Attempts (1960s–1980s)

Pakistan’s offshore exploration began in 1963, with Sun Oil drilling three wells in the Indus Delta. Subsequent efforts in the 1970s and 1980s by Wintershall, Marathon, and OGDCL revealed limited success. Key findings included gas shows in the Miocene and shaly source rocks beneath the Deccan volcanics.

  1. Exploration Stagnation (1990s–2010s)

Despite the discovery of gas at Pakcan-1, efforts by international operators such as Total Energies, Oxy, and PPL yielded no major breakthroughs. The most recent well, Kekra-1 (2019), drilled by ENI, failed to confirm commercially viable resources.

  1. Current State

Pakistan’s offshore remains underexplored, with technical challenges, governance issues, and a lack of consistent policy direction deterring investment.

Namibia Offshore Exploration and Lessons for Pakistan

Lessons from Namibia for Pakistan

  1. Persistence and Long-Term Vision
    Namibia’s success came after decades of effort and numerous dry wells. Pakistan must adopt a similar mindset, understanding that significant discoveries often require persistence over time.
  2. Investor-Friendly Policies
    Namibia’s transparent regulations and open licensing system encouraged international participation. Pakistan must revise its offshore policies to offer competitive fiscal terms, ensuring clarity and fairness for foreign investors.
  3. Data-Driven Exploration
    Namibia invested heavily in seismic data acquisition and geological modeling, reducing exploration risk. Pakistan should prioritize similar initiatives, including basin analog modeling and leveraging advanced seismic technologies.
  4. Strategic Partnerships
    Collaboration with supermajors like Shell and TotalEnergies brought cutting-edge technology and expertise to Namibia. Pakistan should foster partnerships with global leaders in offshore exploration.
  5. Political and Economic Stability
    A stable environment is crucial for attracting and retaining investors. Pakistan must focus on creating a favorable business climate, addressing governance issues, and ensuring policy continuity.
  6. Technology and Innovation
    Namibia’s adoption of advanced 2D and 3D seismic methods proved pivotal. Pakistan should invest in modern exploration technologies to improve success rates.

Conclusion: A Path Forward for Pakistan

 Namibia’s offshore journey illustrates the power of resilience, innovation, and collaboration in unlocking hydrocarbon potential. By drawing inspiration from Namibia’s approach, Pakistan can chart a path toward energy security.

Key steps include fostering an investor-friendly ecosystem, prioritizing data acquisition, and engaging with international experts. With sustained efforts and strategic planning, Pakistan’s offshore potential can transform into a vital resource for the nation’s energy needs.

Pakistan's Oil & Gas Investment and Regulations
Categories Blog, exploration

Pakistan’s Oil & Gas Investment and Regulations

Author saifenergy

The oil and gas industry in Pakistan offers a promising environment for energy companies. Pakistan has set up strategic areas, rules, and benefits for companies that explore and produce oil and gas (E&P). These policies are designed to make things easier and to bring in more foreign money. Let’s look at the different areas, how companies get permission to work there, and the good deals available in Pakistan’s oil and gas industry.

Zoning for Onshore and Offshore Oil and Gas Exploration

Pakistan has divided its onshore and offshore areas into different categories based on the geological risks and the amount of investment needed:

  1. Onshore Zones:
    • ZONE-I and ZONE-I(F): High-risk, high-cost areas with significant geological challenges.
    • ZONE-II: Moderate risk with high to medium cost requirements.
    • ZONE-III: Low risk and low cost, making it more accessible for E&P activities.
  2. Offshore Zones:
    • Shallow (up to 200m): Easier to access with lower risks.
    • Deep (200-1000 m): Moderate accessibility and higher technical challenges.
    • Ultra Deep (Beyond 1000m): High-risk, high-investment areas with potentially large rewards.

This organized zoning helps companies assess the balance between risk and reward in each area, guiding their strategies according to geological and financial considerations.

Concession Award Process for E&P Rights

Pakistan’s upstream sector provides three procedures for granting E&P rights:

  1. Competitive Bidding:

Petroleum Exploration Licences are given for both land and sea areas. Companies try to win these by using Work Units, a new idea that lets them change their plans to get the best results.

  1. Government-to-Government Agreements:

Companies that work closely with the government can get the right to explore new areas without having to compete with others. This helps build strong relationships between the government and these companies, and it also benefits both sides.

  1. Reconnaissance Permits:

For businesses that conduct research and surveys, non-exclusive licenses can be acquired through direct talks, allowing them to gather data from multiple sources.

Invitation to Bid: Transparency in the Bidding Process

To guarantee a fair and clear process, the Directorate General of Petroleum Concessions (DGPC) publishes public invitations for companies to submit their bids. These bids are open for at least 60 days, giving enough time for interested companies to join. The process favors companies that offer the most Work Units. If several companies offer the same amount, they can submit new bids to make the competition more equal.

Agreement Execution for E&P Activities

The DGPC helps make it easy and fast to sign Petroleum Concession Agreements (PCA) or Production Sharing Agreements (PSA) using standard templates. This organized process reduces paperwork and delays, so companies can start their exploration work as soon as possible.

Gas Market Access and Infrastructure

E&P companies have permission to build and run pipelines for both local use and exporting. The gas market works with an open-access system, where companies with solid plans get priority. The building of pipelines follows the government’s energy plan, and the prices are controlled by the right groups, making sure companies make money while also looking out for the public’s needs.

Investment Incentives: A Favorable Onshore Package

Pakistan’s onshore oil and gas exploration package has several benefits to encourage foreign investment:

• Royalties: A standard 12.5% royalty on the value of petroleum produced is applied. This gives the government a fair share while keeping costs reasonable for companies.

• Corporate Income Tax: The tax on profits is capped at 40%, and royalty payments can be deducted as expenses. This makes Pakistan a good choice for large oil and gas companies.

• Local Partnership Requirement: Foreign companies must partner with local firms, like GHPL. This helps local businesses grow and allows international expertise to enter the market.

• Production Bonuses and Work Units: Companies get bonuses based on how much they produce, and Work Units allow for flexible work requirements. This helps companies adjust their plans based on the actual conditions they find.

Import Duties and Taxes

The rules for taxes provide significant benefits for companies doing oil and gas work:

  • Imported equipment that isn’t made locally has a 5% import tax, while locally made items have a 10% tax, and wellhead equipment has a 15% tax.
  • Companies that provide technical services to oil and gas firms don’t have to pay import duties, sales tax, or license fees, which lowers their costs.

Social Welfare and Training Contributions

Acknowledging the significance of community well-being, the rules require oil and gas companies to make social and training payments:

  • Training Payments: These companies pay yearly, with $25,000 during the search for oil and gas and $50,000 during the building phase.
  • Social Welfare Payments: Depending on how much oil and gas they produce, companies fund local welfare projects, helping communities in areas where they search for and produce oil and gas.

Key Takeaways

Pakistan’s oil and gas industry is set up to bring in investments while considering economic, environmental, and social needs. By using a system of zones and competitive offers, along with government help and benefits, the country makes it easier and more profitable for companies to find and produce oil and gas.

For more details, refer to the Petroleum (Exploration and Production) Policy 2012.