Pakistan discovers major gas reserves in North Waziristan

KARACHI: Pakistan has discovered significant gas reserves, estimated at 351.2 billion cubic feet (BCF), in the Shewa fields of North Waziristan, with an expected lifespan of 17 years.

According to a report in The Express Tribune, the new discovery is set to inject 70 million cubic feet per day (mmcfd) from the Shewa-2 well into the national grid, boosting domestic gas production by over 3% daily. This increase will reduce reliance on costly fuel imports, conserving hundreds of thousands of U.S. dollars in foreign exchange reserves.

As detailed in Mari Petroleum’s 2024 Annual Report, released on Tuesday, the company will connect 70 mmcfd of gas from Shewa-2 to the system via a pipeline recently built by Sui Northern Gas Pipeline Limited (SNGPL). Topline Research analyst Sunny Kumar noted that hydrotesting of the pipeline is currently underway.

The project had encountered delays due to security concerns, but the pipeline was completed in August 2024. The gas will begin flowing into the grid following the commissioning of the Early Production Facilities (EPF) and subsequent ramp-up. Mari Petroleum’s report highlighted that this development will increase indigenous gas supply by over 3%, enhancing production capacity, diversifying the company’s portfolio, and generating substantial revenue.

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Kumar emphasized that as of June 2024, Shewa’s gas reserves are estimated at 351.2 BCF, with a production lifespan of approximately 14 years at 70 mmcfd. Following the announcement, Mari Petroleum’s share price rose by 1.93%, closing at Rs3,510.73 per share with a trading volume of 125,759 shares on the Pakistan Stock Exchange (PSX).

Mari Petroleum operates the Waziristan Block with a 55% working interest, while the Oil and Gas Development Company (OGDC) and Orient Petroleum Inc. (OPI) hold 35% and 10% interests, respectively. The annualized impact on Mari Petroleum is projected to be Rs60-65 per share (11-12% of annual earnings for FY25), while OGDC’s share will see an impact of Rs1.2, based on oil and gas price assumptions of $80 per barrel and $5.9-6.0 per mmbtu (million British thermal units).

Several appraisal and exploration wells are planned in the Waziristan Block to optimize its hydrocarbon potential. Among these, the Spinwam-1 exploratory well was spudded on May 28, 2024, with drilling expected to be completed by the third quarter of FY2024-25.

Recent data shows that Pakistan’s crude oil and gas reserves have seen a turnaround, with crude oil reserves increasing by 26% and gas reserves by 2% as of June 30, 2024. This development has reversed a long-standing trend of depletion, extending the lifespan of the country’s oil and gas reserves to 10 and 17 years, respectively.