OGDC faces hurdles in unlocking Baragzai oil potential: report

Oil and Gas Development Company Limited (OGDC), Pakistan's leading exploration and production firm, is grappling with infrastructure challenges that may impede its ability to fully utilize the production potential of the Baragzai field. During an analyst briefing discussing financial performance and future outlook, OGDC management acknowledged the need to address facility issues at Lashari before pursuing further expansion, according to a report from Arif Habib Limited (AHL).

Managers also shed light on the untapped production potential of the Rajian field, estimating it to produce between 8,000 and 10,000 barrels per day. However, this vital resource would necessitate arrangements with suppliers and refineries to handle its heavy crude (11-12° API) before ramping up production. OGDC anticipates substantial progress within the next 1-1.5 years, maintaining annual capital expenditure above Rs100 billion over the next two years.

Notably, actual spending could fluctuate by up to -25%, contingent on tender outcomes and supply costs.

Despite facing natural field declines of approximately 16%, operational obstacles, and pipeline disruptions, OGDC upheld its FY27 guidance for oil and gas production growth of 8-10% year-on-year. Management also touched upon their diversification efforts into unconventional resources and other energy-related opportunities, including geothermal energy and minerals.

An initial test on the Wahid Bakhsh-01 geothermal well yielded lithium concentrations surpassing international benchmarks, prompting OGDC to explore commercial extraction possibilities in partnership with INSTEC. Results from this evaluation are expected within three months.

In a separate development, Turkish Petroleum has joined forces with OGDC's offshore exploration venture. Seismic activities are scheduled to commence within the next couple of weeks, as disclosed by OGDC management.