Russia enters Pakistan in search of oil and gas

Russia is expected to soon return to Pakistan’s petroleum sector after five decades with fresh investment commitments in new exploration and development techniques and construction of cross-country pipelines.

While the two countries are at an advanced stage of talks on a government-to-government contract of a 1,100-kilometre gas pipeline from Karachi to Lahore with an estimated cost of US$2.5 billion, some Russian companies are preparing to enter Pakistan’s exploration and development sector.

Reportedly a leading Russian petroleum company, JGC Rosgeologia (Rosgeo) has recently signed non-binding agreements with two public sector exploration and development companies for investment cooperation. The MoU was signed by KPOGCL’s CEO Raziuddin Razi and Rosgeo’s CEO Roman S. Panov. The two firms would promote the establishment and development of mutually beneficial cooperation in the above areas.

According to the MoU signed with Khyber Pakhtunkhwa Oil and Gas Company Ltd (KPOGCL), Rosgeo from Moscow will extend long-term cooperation in KP’s exploration and production (E&P) sector. The two firms would jointly bid for fresh exploration and concession blocks in upcoming transactions and acquire shareholding from existing companies.

The KPOGCL was created after the 18th Constitutional Amendment to share with federal government ownership of oil and gas rights. In 1961, Pakistan set up its largest E&P firm, the Oil and Gas Development Company Ltd (OGDCL), with the financial and technical support of the then USSR technical experts. The cooperation remained almost non-existent for decades due to diplomatic reasons.

The agreement envisages long-term cooperation between the two companies to perform various E&P activities, including geological and geophysical field works, 2D and 3D seismic data acquisition, drilling and related services, warehousing and jointly acquiring concession blocks in various parts of Pakistan.

Specific cooperation will be in the key priority areas of increasing the economic potential of Pakistan through the identification of new hydrocarbon fields and efficient use of the natural resources by ensuring environmental protection and sustainability.

The joint venture would also carry out geological surveys within Pakistan, using the modern technologies and methods. The Russian company will be responsible for the technical planning and execution, arrangement of rigs and recorders, while KPOGCL will be responsible for security, logistics and transportation, gensets, earth moving equipment, cranes, tractors, camp facilities, local support manning, communication, local clearances, permits, licences, business development, etc.

The cooperation of the two companies will be implemented in phases. A permanent working group comprising the two companies has been constituted to identify, study and evaluate specific projects of mutual interest.

For every specific project of mutual interest, the two companies would establish the appropriate scheme of cooperation and establish a joint company that will undertake the execution of the various projects.

Rosgeo also signed a similar MoU with the OGDCL for E&P cooperation on broader terms within their blocks for mutual benefit and overall reciprocity in accordance with the relevant laws, rules and regulations.

The cooperation under the MoU would include examining the possibility of “farm-in” and “farm-out” opportunities in existing exploration licences and look into opportunities in development and production fields including opportunities related to the application of enhanced oil recovery (EOR) techniques.

The two sides would look into mutually beneficial activities in acquisition, processing and interpretation of 2D and 3D seismic data and formulate strategies for sharing the expertise and training the personnel of both the companies.