Pakistan Petroleum Limited: leading the way

Economic Review, June-July, 2008

PPL - leading the way

Pakistan Petroleum Ltd (PPL), the pioneer of natural gas industry in the country, has been a frontline player of exploration and production sector for well over five decades now.

From the landmark discovery of the Sui Gas Field in 1952 - seventh largest in the world at that time - to its series of other important discoveries, PPL has moved from strength to strength, playing a vital role in Pakistan's economic development and progress.

Today, PPL contributes around 26% of the country's total natural gas production. It also produces Crude Oil/Natural Gas Liquids (NGL) from Adhi field and Manzalai/Makori discoveries in Tal Block. In addition Liquefied Petroleum Gas (LPG) is produced from its Adhi field. It's portfolio of developed and producing assets consists of four operated fields i.e. Sui, Kandhkot, Adhi and Mazarani. It also has working interest in seven partner-operated fields/discoveries, namely; Qadirpur Gas Field and Mela discovery in Nashpa Block operated by OGDCL, Miano and Sawan Gas Fields, operated by OMV, Manzalai and Makori discoveries in Tal Block, operated by MOL, and Block-22 in which PEL is the operator.

PPL's current exploration portfolio consists of 24 exploration blocks out of which eight are PPL-operated and 16 areas, including four offshore blocks, are partner-operated.

As of June 30, 2007, its net reserves consisted of almost four trillion cubic feet of gas, around 2 million barrels of oil/NGL and 339,096 tonnes of LPG. PPL earned Rs 16.8 billion net profit for the year 2006-07 and paid Rs 27.5 billion to the national exchequer during the year.

EXPLORATION

In recent years, PPL has stepped up efforts to increase hydrocarbon production to keep pace with the growing energy needs of Pakistan's rising economy. In order to achieve this objective, it has devised a dynamic exploration and development strategy with a close focus on enhancing its reserve replenishment ratio, improving drilling to discovery ratio and improving production efficiencies through modern production techniques. In addition to 24 existing exploration blocks, PPL has submitted new applications for the grant of four exploration blocks.

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During this year, PPL discovered natural gas and condensate from its exploratory well, Adam X-1 (Hala Block), located in District Sanghar, Sindh. PPL is the operator with 65 percent stake in the block. Three discoveries were also made in partner-operated Nashpa, Ganvbat and Latif blocks, while another exploratory well in partner-operated Tal Block has also shown encouraging results and presently being evaluated for updip potential.

FUTURE PROSPECTS AND PLANS

The Company plans to continue with its extensive exploration programme with a view to add new hydrocarbon reserves and optimize production. It has employed modern technology including state-of-the-art computer applications, remote sensing and communication techniques.

In the nextten years, PPL plans to drill 100 explatory wells out of which about 5 wells are planned to be drilled in PPL operated areas. This reflects the Company's faith in the future - facing the energy challenge, head on.

Conscious aware of the reducing number of low-risk, low-cost exploration areas in the Country, PPL plans to embark on exploration activities in the relatively untapped areas. In this regard, prospectivity evaluation of more challenging areas in the country continue with an aim to identify three to four more prospective areas for submission of exploration license applications as an Operator.

PPL is also the first Pakistani Company to appear on the horizon of international exploration. The Company, in joint-venture with OMV, has recently been awarded Block-29 in Yemen where each partner holds 50% working interest. The Company is also pursuing an aggressive exploration programme with an aim to explore in African and Central Asian countries in collaboration with other international E&P operators.

A DYNAMIC CSR PROGRAMME

At PPL, the Corporate Social Responsibility (CSR) programme ranks high on its agenda. Even when corporate philanthropy had not become a buzz word in the corporate sector, PPL was serving communities living near its exploration and production sites. Over the years, the Company's CSR programme has expanded significantly, focused and organized. PPL Welfare Trust promotes education, provide healthcare facilities, and develop infrastructure in some of the most remote and backward areas of the country.

In recognition of its contribution to the society, PPL was declared the top donor company for the consecutive years of 2004 & 2005 by Pakistan Centre for Philanthropy.

QUALITY POLICY

Quality has always been an integral part of the Company's operations. PPL is aiming to implement the Quality Management System (QMS) at its operating fields and the 'Production Function' of head office by the middle of next year, which will pave the way for ISO certification of its plants and production facilities.

The Company announced its 'Quality Policy' in January 2007 to ensure quality operations at every level. It has embarked upon a comprehensive programme which entails management of quality, health & safety and environmental standards by implementing ISO 9001, OHSAS 18001 and ISO 14001 respectively.