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Oil & Gas production to fall 5-10% YoY during 3Q amidst COVID-19 outbreak

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oil

KARACHI: Oil production in Pakistan is likely to fall 10% YoY during 3rd quarter 2019-20 (vs 1% average decline in 3rd quarter of last two years) amidst lower intake of crude by refineries.

This is largely due to fall in demand owing to country wide lockdown amidst COVID-19 outbreak and supply chain disruptions like unavailability of bowsers etc. During nine-month 2019-9MFY20, oil production is expected to decline by 9.4% YoY to 22.3 million barrels or 81,2000 bpd.

According to the Topline report, gas production during the same period is likely to contract by 5 per cent YoY due to their association with oil production, closure of Sindh based industries and lower demand by energy sector mainly Gencos.

During nine-month 2019-20, gas production is likely to come down by 7 per cent YoY to 367,000 mmcfd.

It is important to note that because of Covid-19 outbreak, oil and gas production has declined by 35 per cent and 17 per cent respectively during first two weeks of lockdown (Mar 23 to Apr 7).

During 3rd quarter 2018-19, Oil and Gas exploration companies managed to arrest the natural depletion in production of 4-5% through induction of new development wells in Adhi and Mardankhel fields, both of which resulted in incremental production of 234k barrels YoY or 2.8% of the total Pakistan oil production.

However during 3rd quarter 2019-20 Geological and Geophysical activities showed a decline, with 3D seismic acquisition falling by 46% YoY and 6% QoQ to 312 Sq. Kms, while 2D increased multifold on a YoY basis (though flat on a QoQ basis).

Drilling activities (meterage) also fell by 34% YoY to 45.2k meters (+14% QoQ). On 9M basis, meterage drilling declined by 25% YoY as the numbers of well spudded till Mar-2020 (FYTD) remained 42 vs. 74 in the same period last year.

During 3QFY20, the Oil & Gas Company’s encountered four dry wells, wherein two were Exploratory (Rangunwari and Katiar) and two were Developmental/Appraisal wells (Nashpa 5A and Mulaki 5).

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