Exploration Companies Incur Over Rs. 50 Billion in Losses

Exploration and Production (E&P) companies in Pakistan have incurred over Rs. 50 billion in losses between 2021 and 2024 due to a cut in gas outflows by Sui companies in the national transmission grid. Companies like OGDC, Mari Petroleum, PPL, and MOL have repeatedly warned that curbing local gas flows jeopardizes the viability of aging wells and requires expensive interventions to restore production. Several wells have failed to recover and caused billions in losses, reported a national daily. On November 13, 2024, Sui Northern Gas Pipelines Limited (SNGPL) reduced gas intake from local fields by 200 mmcfd, which has since escalated to 285 mmcfd. Big reductions include 90 mmcfd from the Sui field (PPL), 48 mmcfd from HRL/Ghazij (Mari Petroleum), and 50 mmcfd from MOL-operated fields. This makes several fields vulnerable to irreversible damage. The current reduction in power sector gas consumption has worsened system pressures. A significant portion of the country’s RLNG and local gas supply remains underutilized due to lower electricity demand and a preference for cost-efficient generation sources like coal, nuclear, and hydropower. Expensive RLNG discourages its use, particularly as seasonal demand declines in Punjab and Khyber Pakhtunkhwa. The Power Division has emphasized its preference for cheaper power generation options to mitigate rising energy costs which could make gas consumption across sectors much more complicated.