Kuwaiti oil corporation seeks to exit Pakistan, sells key assets
Foreign E&P companies increasingly disheartened, primarily due to massive circular debt in gas sector: source
- KUFPEC to “recover its investments” by selling assets.
- Company’s decision has raised serious concerns for policymakers.
- PEL also confirms making advance payments to KUFPEC.
ISLAMABAD: Kuwait Foreign Petroleum Exploration Company (KUFPEC) has started the process of leaving Pakistan’s oil and gas sector by selling its major assets to Pakistan Exploration (Private) Limited (PEL) for about $60 million, according to a senior Ministry of Energy official who spoke to The News on Monday.
“The foreign E&P companies are increasingly disheartened, primarily due to the massive circular debt in the gas sector, which has reached Rs2,700 billion,” the source told the publication.
“Of this, Rs1,500 billion, including $600 million owed to local and foreign Exploration and Production (E&P) companies, remains unpaid due to defaults by the gas companies. The 12-month delay in approving amendments to the 2012 E&P policy also contributed to KUFPEC’s decision,” the source said.
As per the official, KUFPEC has made the decision to recover its investments by selling its concessions and assets in different blocks around Pakistan in order to reinvest in other countries.
In April 1981, KUFPEC was founded as a division of Kuwait Petroleum Corporation (KPC). The company’s primary focus is on finding, developing, and extracting natural gas and crude oil outside of Kuwait. It has operations in ten nations on five continents — Europe, Asia, Africa, North America, and Australia.
Notably, KUFPEC declared in a press release on November 23, 2023, that it has signed Memorandums of Understanding (MoUs) with several Pakistani corporations, including Prime Pakistan Limited, Mari Petroleum Company Limited (MPCL), and Oil and Gas Development Company Limited (OGDCL). Enhancing KUFPEC’s exploration portfolio, strategic alliances, and asset value in Pakistan was the goal of the MoUs.
KUFPEC CEO Mohammad Al-Haimer had stated at the time: “The MoUs are not limited to strengthening strategic partnerships to expand our exploration portfolio in Pakistan but also provide significant opportunities to enhance KUFPEC’s assets, independent peer reviews, knowledge exchange, and utilising the expertise of our global partners.”
However, just a year later, KUFPEC’s decision to sell its assets and concessions has raised serious concerns for policymakers in Pakistan. When contacted, PEL confirmed the acquisition, stating, “Yes, we have acquired KUFPEC Pakistan’s assets after winning the bid.”
However, the company declined to disclose the asset value, citing non-disclosure agreement (NDA) obligations. PEL also confirmed making advance payments to KUFPEC. According to a press release on PEL’s website, the acquisition includes assets in Pakistan’s Dadu, Kirthar, Tajjal, and Qadirpur concessions, along with the Bhit and Qadirpur leases.
“This strategic acquisition marks a significant milestone for PEL as it expands its exploration portfolio and strengthens its presence in Pakistan’s energy sector. It underscores PEL’s commitment to discovering and harnessing the country’s energy potential,” the release stated.
The acquisition aligns with PEL’s long-term strategy to explore energy opportunities and unlock Pakistan’s vast natural resources. “We are confident that these assets will help us meet the growing energy demands of Pakistan,” PEL said.
PEL reiterated its commitment to the exploration and development of Pakistan’s natural resources and its role in contributing to the country’s energy security and sustainable growth.
