OGDCL launches Dera Bugti well, supporting Pakistan’s shift from LNG imports

The Oil and Gas Development Company Limited (OGDCL), Pakistan’s largest exploration and production company, has launched natural gas production from a new development well, Uch-35, in Dera Bugti, Balochistan. The well, with a depth of 1,345 meters targeting the Sui Main Limestone formation, is yielding approximately five million standard cubic feet per day (MMSCFD). This gas is now processed through the OGDCL-operated Uch Gas Processing Plant, ensuring efficient distribution to Uch Power Limited.

This move comes as Pakistan reorients its energy strategy to prioritize domestic resources over costly imported liquefied natural gas (LNG), a shift catalyzed by a decline in electricity consumption. Recent policies from the Ministry of Petroleum signal a redirection of LNG to meet local consumer demand. This reallocation requires an investment of approximately $577 million (Rs163 billion).

The transition offers an opportunity to mitigate the mounting circular debt within Pakistan’s energy sector. Current tariff differences between imported LNG, priced at $12.40 per MMBtu (Rs3,500/MMcfd), and local gas, at $5.50 per MMBtu (Rs1,550/MMcfd), have pressured the sector. The government plans to align these tariffs to recover an estimated $708 million (Rs200 billion) in annual revenue. Tariffs on fertilizer companies are also set to rise as part of this financial restructuring.

OGDCL’s recent output, coupled with additional LNG made available from the shuttered captive power plants, is expected to supply an extra 150 million cubic feet per day to the gas sector, which currently earns about $1.42 billion (Rs400 billion) annually from captive power plants alone. Despite this operational success, OGDCL reported a 16% dip in quarterly profit, down to $142 million (Rs41.02 billion) from $170 million (Rs49.03 billion) in the previous year.

Strategically positioned as the sole operator of the Uch Development & Production Lease in Dera Bugti, OGDCL’s long-term emphasis on in-house expertise and exploration advancements has fortified its role in Pakistan’s energy landscape.