Business Mode

Khyber Pakhtunkhwa Oil and Gas Company Limited Business Mode:

Exploration and production of oil and gas has many functional divisions, such as investment as an operator, non-operated partner or service provider. Investment would need to be weighed against risk and return. It would be prudent to spread the risk by starting with the services sector and being a non-operated joint venture partner with established names such as MOL, POL, PPL, and OGDCL.

Needless to say, KPOGCL would need to develop its own expertise, as well. MGCL (Mari Gas) and GHPL (Govt. Holdings Pvt. Ltd.) formed by the Federal Government are good models to follow, where it invested prudently and now these companies are quite solvent. MGCL has diversified itself by being not only an operator but also utilizing its own drilling rig for business. MGCL and GHPL were both given a helping hand by the Federal Government and state owned companies, namely OGDCL and PPL. It may be expected that a number of international and local E&P companies, hedge funds, venture funds and private equities will approach KPOGCL for partnership, as the market buzzes that KPOGCL will be the gate way to Oil and gas prosperity not only for KP but for the masses of Pakistan.

The business models envisaged for this company are manifold, like any other Exploration and Production company. There exist models of a number of national and international companies, such as GHPL, OGDCL, Marigas, PPL, OMV, Petronas and ONGC that were once small and fragile state owned companies that grew from very humble beginning into giants with operations in a number of countries. Learning from their successes and failures, plans and strategies have been drawn in developing this Bankable Business Plan.
The following market plan is suggested for KPOGCL:

a. Service provider: (start from day-1)

i.   Preliminary Geological and Geophysical (G&G) Survey
ii.  Geological and Geophysical (G&G) Studies

  • Reconnaissance
  • Magnetic and Gravity Survey                  

iii.  2D Seismic Data Acquisition
iv.   3D Seismic Data Acquisition
v.    Drilling exploratory wells
vi.   Drilling appraisal wells
vii.  Drilling production wells
viii. Work over (the company would require to procure a workover rig)
ix.  Wells Services
x.   Down Hole Services
xi.   Ancillary Services, such as camp supply, camp management, logistics, diesel engine supply/operation/maintenance, catering, security, human resource supply etc.

b.    Investment & JV (after 2 years and accumulating Retained Earning)

i)     Investment in producing fields as a non-working interest JV partner;
ii)     Investment in producing fields as a working interest/operator JV partner,
iii)    Investment at exploration stage as a non-working interest JV partner;
iv)    Investment at exploration stage as a working interest/operator JV partner;
v)     Investment at bidding stage as a non-working interest JV partner;
vi)     Investment at bidding stage as a working interest/operator JV partner;

The risk and reward profile of each one of the aforementioned steps varies with the area of operation, partners and skill levels. It is suggested that KPOGCL first starts providing the following exploration services, which is almost no-risk and low capital expenditure 10% variation is expected, such as:

  • G&G, Survey and Reconnaissance, (Capex US$ 3.21 Million)
  • 2D/3D Seismic Data Acquisition, (Capex US$ 9.39 Million with 428XL Sercel Recorder) and
  • Well Drilling Rig. (Capex US$ 16.45 Million for a 2000 hp Rig)
  • The data recorder and drilling rig equipment are not readily available but have to be ordered with a lead time of up to 8 to 10 months.