Pakistan oil, gas drilling falls short of target in fiscal 2010-11

Pakistan's upstream companies drilled only 42 wells in the fiscal year to June 30 due to issues with security and a persisting "circular debt" problem, a Ministry of Petroleum official said Friday.

The government had set the companies a target of drilling 80 wells in FY2010-11. But only 12 exploratory wells and 30 appraisal/development wells were drilled in the year, against targets of 29 and 51, respectively, the official said.
In the prior fiscal year ended June 30, 2010, 68 wells were drilled. Pakistan's oil sector has been entangled in a debt trap since mid-2008.
The problem has left state-run refineries, oil marketing companies, electricity producers and gas companies unable to pay for oil and gas purchases, resulting in outstanding bills of around Pakistan Rupees 225 billion ($2.6 billion). The circular debt problem had affected the liquidity of local exploration and production companies, restricting drilling activity.
Pakistan's annual demand for petroleum products is about 20 million mt (400,000 b/d), of which only 13% is being met from local sources, with the remainder imported. Imports of crude oil, diesel and fuel oil totaled 7 million mt, 4.6 million mt and 6.6 million mt, respectively, in the 2009-2010 fiscal year, and cost a total of $10 billion.
Source: Platts