OGDC cash flows stabilize as foreign energy majors eye Pakistan

The Oil and Gas Development Company Ltd. (OGDC) has seen a sharp improvement in the settlement of its long-delayed invoices following targeted policy and administrative interventions by the government, a development that has helped contain the buildup of circular debt and strengthened the company’s financial position at a critical time for the energy sector.

MD OGDCL Ahmed Hayat Lak while briefing media persons in Islamabad on Thursday said that coordinated steps were taken to ensure timely payments by Sui gas companies, a long-standing bottleneck in the sector. As a result, OGDC is now receiving scheduled interest payments on its Term Finance Certificates (TFCs), while the principal amount has recently been recovered in full.

He said the company is currently receiving around Rs7 billion to Rs9 billion in interest payments each month.

The improved cash flow comes as Pakistan intensifies efforts to attract foreign investment into its upstream petroleum sector. Azerbaijan’s state oil company, SOCAR, is sending a technical team to Pakistan from Dec. 8 for weeklong meetings with OGDC to evaluate potential onshore and offshore opportunities, MD OGDCL said on Thursday.

The discussions will focus on exploration licenses, petroleum leases and possible international collaborations in both conventional and offshore drilling. The visit marks a renewed push to diversify Pakistan’s upstream partnerships amid declining indigenous production and rising energy demand.

Meanwhile, Turkey’s state-owned Turkish Petroleum has emerged as a key new player in Pakistan’s energy landscape. The company has signed five agreements covering both offshore and onshore blocks and will lead seismic and drilling operations in the Indus Block-C in partnership with OGDC, Pakistan Petroleum Ltd. (PPL) and Mari Energies Ltd. (MEL).

Definitive agreements have already been signed for multiple blocks. Turkish Petroleum is also setting up a permanent office in Pakistan with a resident team of 15 to 20 professionals to oversee its expanding operations, he said.

On the mining front, progress on the multibillion-dollar Reko Diq project is proceeding according to schedule, with project financing secured under a 50-50 structure of equity and project finance. The financing package is being described as the largest ever for a mining project in Pakistan.

International financial institutions have reposed full confidence in the project and in the state-owned enterprises participating as shareholders. The project will be developed in two phases, with significant room for expansion over time.

Once fully operational, Pakistan is expected to earn between $1.5 billion and $2 billion annually from Reko Diq, providing a major boost to foreign exchange earnings, fiscal revenues and long-term economic stability.