OMV makes another major step towards energy security in Pakistan

• OMV and Latif joint venture partners sign lease deed for the development of Latif gas field in the province of Sindh, Pakistan
• New petroleum Exploration and Production policy 2012 in Pakistan encourages new investments in the upstream oil and gas sector
• Latif field production will contribute around 6,000 boe/d of production to OMV in 2014 and therefore be a key contributor to production growth in Pakistan

On October 4, 2012, OMV and its joint venture partners signed the development and production lease deed for Latif gas field located in the Sindh province of Pakistan. OMV is the operator of Latif concession and holds a 33.34% interest. The other partners in the joint venture are Eni (33.33% interest) and PPL (33.33% interest). The development will comprise of drilling of new wells and construction of a 50 km pipeline to transport Latif gas to the OMV operated Sawan gas plant where Latif gas will be processed and thereafter delivered to customers. OMV is targeting a net production of 5,700 boe/d from Latif in 2014 thereby delivering on a key initiative under the group-wide performance program “energize OMV”.

The Latif gas field was discovered in 2007 in the Latif exploration license and started production under extended well testing arrangement in late 2008. It is located in the Sindh province, in the Middle Indus, a core area of OMV and next to the major OMV operated plants in Miano/Kadanwari and Sawan. Latif field has been fully appraised with new 3D seismic and by drilling three appraisal wells. The field development will comprise of drilling and completion of new wells, wellhead compression, construction of a new raw gas pipeline to connect Latif field with Sawan processing plant, and the construction of reception and metering facilities at Sawan. The total investment for the development amount to EUR 107 mn. It is planned to commence production from Latif field through Sawan plant in late 2013 with the aim to achieve a plateau production of around 18,000 boe/d.

Sawan is a state-of-the-art sour gas processing plant which was constructed, and has been
operated by OMV since start-up in 2003. Sawan field’s own production is under natural decline which will provide processing capacity for Latif gas production in Sawan plant. Sawan field will also benefit from this arrangement due to cost sharing that enables extension of field production beyond the economic cut off associated with standalone production.

The Latif field development decision which had been stalled for some time was rendered economically feasible due to the new petroleum policy of Pakistan (notified on September 1, 2012). This policy provides higher prices for new discoveries and for investments leading to incremental production over and above the reserves approved and certified.

Jaap Huijskes, OMV Executive Board Member responsible for Exploration and Production: “This is a clear win-win situation. Pakistan receives the confirmed Latif gas reserves at a very low price; even the incremental production will be delivered at prices well below competitive fuels. Nevertheless the new pricing as per policy 2012 for incremental production provides OMV and joint venture partners with sufficient incentive to make new investments to prove and develop new reserves. On the basis of this new commercial agreement OMV will drill immediately four development wells instead of two that were committed in the field development plan”. 

Background information:
OMV Pakistan
OMV (Pakistan) Exploration GmbH, a 100% owned subsidiary of OMV Aktiengesellschaft started exploration activities in the province of Sindh in 1991. The first significant gas discovery was made at Miano in the Sukkur District in eastern Sindh province in 1993, followed by Sawan discovery in 1997. Further discoveries, Latif and Tajjal gas fields, were made in 2007. In 2011, OMV closed the acquisition of Petronas Carigali Pakistan Limited which provided access to additional fields (Mehar, Rehmat, Saqib). At present OMV holds interests in eight exploration blocks in Pakistan, of which five blocks (South West Miano II, Gambat, Latif, Mubarak, and Mehar) are operated by OMV and three blocks (Harnai, Barkhan, and Kalat) are operated by two major national E&P companies.

OMV Aktiengesellschaft
With Group sales of EUR 34.05 bn and a workforce of 29,800 employees in 2011, OMV Aktiengesellschaft is one of Austria’s largest listed industrial companies. In Exploration and Production, OMV is active in two core countries Romania and Austria and holds a balanced international portfolio. OMV had proven oil and gas reserves of approximately 1.13 bn boe as of year-end 2011 and a production of around 288,000 boe/d in 2011. In Gas and Power, OMV sold approximately 272 TWh of gas in 2011. In Austria, OMV operates a 2,000 km long gas pipeline network with a marketed capacity of around 101 bcm in 2011. With a trading volume of around 40 bcm in 2011, OMV’s gas trading platform, the Central European Gas Hub, is amongst the most important hubs in Continental Europe. In Refining and Marketing, OMV has an annual refining capacity of 22 mn t and as of the end of 2011 approximately 4,500 filling stations in 13 countries including Turkey. OMV further strengthened its position through the ownership of a 97% stake in Petrol Ofisi, Turkey’s leading company in the retail and commercial business.