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Oil and gas production declined by 4.8% in H1

By Tanveer Ahmed

KARACHI: The total oil and gas production decreased by 4.8 percent during the first half of current financial year compared with the corresponding period of last year due to a decline in output by some major fields.

The oil and gas production totaled at 58.5mnboe in July-December period of 2006-07 against 61.3mnboe oil and gas produced in the same period of previous year, the latest data of production made available to Daily Times indicate.

During the period under review, gas production declined by 5.8 percent to 50.52mnboe as compared with 53.34mnboe in the corresponding period of 2005-06, while oil production increased marginally 0.1 percent 7.98mnbbl against 7.97mnbbl of previous year.

The analysts of oil and gas sector attributed the decline in total production to the decline in the output by the Pindori, Pirkoh, Uch and Loti fields.

However, the start of the production by some newly-made discoveries in the oil and gas sector, are expected to increase the total production of the sector in the coming days, Hussain Yasar, an analyst at Firstcapital believes.

The country’s oil and gas sector, especially the listed companies of the sector, has been making windfall in the recent times due to high international prices of crude oil with the growing profitability of these companies.

The exploration and production sector registered a healthy earning growth of 22 percent due to high crude oil prices in the first half of current financial year compared to same period of previous year.

Due to this strong earning growth, all the listed companies of the sector has shown positive growth in the profitability as total profitability of the sector reflecting a growth of 22 percent in the profitability. The total profitability of the sector stood at Rs.35.3 billion in the first half of the 2006-07 compared to Rs 28.9 billion during the same period of last year.

The growth in profitability of the sector has been attributed to a combined effect of higher international oil prices and relatively sustained production levels.

Also, the other income of the sector also depicted 22 percent growth due to the increase in the rates of return on short-term investments and secondly to rendering more geophysical services to outside parties.

The OGDC remained the largest contributor to the overall profitability of the sector by holding a share of 65 percent while the other two listed PPL and POL have respectively contributed 24 percent and 11 percent to the profitability.

Hussain Yasar noted that the sector holds strong prospects of future growth on back of higher energy prices and ongoing exploration & development activities. During the last few years, the government of Pakistan has continuously been focusing on the sector by sketching attractive policies in order to increase exploration and development activities.

During the first half, a total of five discoveries made were made in oil & gas sector, out of which three were by the OGDC as against last year’s overall three discoveries. “We expect the full year profitability of the sector to depict 29 percent growth as compared to the last year”, the analyst added.

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