KUFPEC exits Pakistan, sells $60 million in assets to PEL

ISLAMABAD: The Kuwait Foreign Petroleum Exploration Company (KUFPEC) has begun its withdrawal from Pakistan’s oil and gas industry by selling its significant assets—valued at approximately $60 million—to Pakistan Exploration (Private) Limited (PEL), according to an official from the Ministry of Energy, The News reported.

According to the official, many foreign exploration and production (E&P) companies were growing increasingly frustrated, largely due to the extensive circular debt in the gas sector, which has escalated to Rs2,700 billion.

Of this total, Rs1,500 billion, including $600 million owed to both domestic and international E&P companies, remains unpaid, attributed to the defaults of gas companies.

An additional factor influencing KUFPEC’s decision was the year-long delay in approving changes to the 2012 E&P policy.

KUFPEC has opted to recover its investments by divesting its assets and concessions across various blocks in Pakistan so it can reinvest in other countries.

Established in April 1981 as a subsidiary of Kuwait Petroleum Corporation (KPC), KUFPEC focuses on the discovery, development, and extraction of crude oil and natural gas outside Kuwait, with operations in ten countries across five continents, including Australia, Asia, Africa, North America, and Europe.

In a somewhat surprising turn, KUFPEC had released a statement on November 23, 2023, announcing the signing of MoUs with several Pakistani companies, including Oil and Gas Development Company Limited (OGDCL), Mari Petroleum Company Limited (MPCL), and Prime Pakistan Limited to strengthen KUFPEC’s strategic partnerships, expand its exploration portfolio, and enhance asset value in Pakistan.

However, just a year later, KUFPEC’s decision to divest its assets has raised alarms among Pakistani policymakers.

When reached for comment, PEL confirmed the acquisition, stating, “Yes, we have successfully acquired KUFPEC Pakistan’s assets after winning the bid,” although they declined to disclose the value of the assets due to non-disclosure agreement obligations. PEL confirmed it had made advance payments to KUFPEC.

According to PEL’s website, the acquired assets include concessions in Dadu, Kirthar, Tajjal, and Qadirpur, as well as leases in Bhit and Qadirpur.

“This strategic acquisition represents a significant milestone for PEL as it enhances its exploration portfolio and solidifies its presence in Pakistan’s energy sector. It reflects PEL’s commitment to tapping into the country’s energy potential,” it said.

PEL added that this acquisition aligns with its long-term strategy to explore energy opportunities and unlock Pakistan’s vast natural resources, expressing confidence that these assets would help meet the nation’s growing energy demands.