E&P Companies Push for Depletion Allowance Amidst Regulatory Challenges


In a bid to bolster hydrocarbon exploration and production (E&P) in Pakistan, companies are urging the government to grant a 15% depletion allowance on ageing fields, advocating for a waiver on the additional 15% wellhead value. This plea comes amidst discussions to ease the windfall levy on gas and condensate, emphasizing the need for incentives to optimize operations in mature fields.

Sources reveal that E&P firms are highlighting the economic viability challenges posed by ageing fields, stressing the importance of cost-effective strategies like artificial lift systems ranging from $0.3 million to $0.9 million. They argue that price incentives coupled with tax relaxations would not only enhance operational efficiency but also facilitate the adoption of optimization techniques crucial for sustaining production levels.

The Oil and Gas Development Company Limited (OGDCL) stands at the forefront of these efforts, investing significantly in exploration activities despite operational challenges in Balochistan. OGDCL’s initiatives include accelerating exploratory drilling, upgrading artificial lift systems, and pursuing strategic partnerships to maximize production potential.

The company’s ambitious targets aim to increase oil production from 34,000 to 50,000 barrels per day over the next few years, with a focus on key fields and pressure maintenance projects. Additionally, OGDCL’s technological advancements align with global industry standards, underscoring its commitment to long-term sustainability and growth.

Story by Zafar Bhutta

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