Shell Started Offshore Drilling in Pakistan

Shell has started much awaited offshore drilling in Indus Block this week. "With pre-drill resource potential of 300 mm bbl oil, Shell drilling in Anne-1 well in Pakistan's ultra-deep offshore region commenced this week", an analyst at KASB Securities said in its recent report.

Oil and Gas Development Company and Pakistan Petroleum Limited carry 30 percent and 20 percent stake respectively. The exploration potential in Pakistan's offshore is believed to be high, but the reserve potential is yet to be established, as the offshore region is relatively under-explored.

A total of 15 offshore wells have been completed with no commercial discoveries to date. High exploration potential has attracted many big names, eg ENI, BP, Petrobras, Shell.

Under the production sharing agreement (PSA) of offshore package in Petroleum Policy 2001, the government's share in profit and royalty payments are back-loaded (increases in later years), allowing a rapid recovery of investment. Furthermore, the cost recovery has a maximum allowable limit of 85 percent, including royalty payment.