The Kuwait Foreign Petroleum Exploration Company (KUFPEC) is winding down its oil and gas operations in Pakistan.
Hanif Khalid, a journalist from Jang News, reports that a senior official from the Ministry of Energy has stated KUFPEC has sold its assets, worth around 600 million Pakistani Rupees, to Pakistan Exploration (Private) Limited due to the significant financial strain caused by circular debt, compounded by policy delays in the sector.
The gas industry alone is grappling with a circular debt of 2,700 billion Rupees, making it challenging for local and foreign exploration and production (E&P) companies to sustain their operations. Specifically, 1,500 billion Rupees of this debt is tied up with these companies, with foreign entities owed around 600 million USD. These financial challenges are largely a result of gas companies’ non-payment issues.
Kuwait Foreign Petroleum Exploration Company (KUFPEC) sells its assets worth $60 million in several blocks to Pakistan Exploration Limited (PEL) to reinvest in other countries
Read: https://t.co/u9VboqKn5h pic.twitter.com/eKifFbwFev
— Profit (@Profitpk) December 24, 2024A significant factor affecting KUFPEC’s choice was the delay in finalizing the updated 2012 E&P Policy, which required an additional year to complete.
Following the sale of its assets in Pakistan, KUFPEC intends to redirect these funds to projects in other countries. Founded in 1981 as a Kuwait Petroleum Corporation (KPC) subsidiary, KUFPEC specializes in exploration and development initiatives for crude oil and natural gas in diverse regions, such as Australia, Asia, Africa, North America, and Europe.
KUFPEC’s CEO, Mohammad Al-Hair, expressed the company’s intention to foster strategic partnerships in the future by signing Memorandums of Understanding (MoUs).
Industry sources have voiced concerns that KUFPEC’s withdrawal might decrease foreign investment within Pakistan’s energy sector. Moreover, if the circular debt issues remain unresolved, other E&P companies may consider exiting the market under similar circumstances.
