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US oil, gas services firm to wind up Pakistan operations

US oil, gas services firm to wind up Pakistan operations

ISLAMABAD: A leading international oil and gas services firm is reportedly winding up its operations in Pakistan, causing a setback to exploration and development companies operating in the country and rendering more than 60 professionals jobless.

Based in Houston, US, and operating in more than 90 countries, Baker Hughes is one of the largest oil field services companies in the world providing the oil and gas industry products and services for drilling, formation evaluation, completion and production and reservoir consultations.

This happens at a time when the government claimed to have drilled a record 98 exploration wells in the country in a single financial year ending June 30 this year, surpassing its own target of drilling 94 wells.




“Baker Hughes is pulling out of Pakistan in an abrupt manner and it’s a major setback to our oil exploration companies,” a chief executive of an exploration and production company told Dawn.

He said gas exploration companies would remain unaffected by the US firm’s exit, but oil exploration companies would suffer a lot. “It’s not a good sign for the oil exploration industry. This will lead to monopoly of a couple of remaining service providers.”

He said the company was leaving the country without completing regulatory approvals, adding that the decision came following a $35 billion failed plan for strategic merger between two US petroleum giants — Baker Hughes and Halliburton.

As a consequence, the company had to go for massive layoffs.

When contacted, Shahid Raza, the Country Lead for Baker Hughes, said the company was not being wound up abruptly, adding that non-profitable operations were being shut down while some operations would remain here.

He dispelled the impression that the company was leaving the country without regulatory approvals. “We are a leading multinational company and we will take all regulatory approvals like any other multinational firm. This will take four to six months,” he said.

When asked if Baker Hughes was winding up or scaling down its operations in Pakistan and if the government had given it a no-objection certification, Petroleum Minister Shahid Khaqan Abbasi said on July 19 that he was not sure about the exit and would get back in a day after checking facts.

He did not respond when reminded on Sunday.

An officer close to the minister said services companies required clearances from the Board of Investment, Federal Board of Revenue and Securities and Exchange Commission of Pakistan. “They do not need clearance from the petroleum ministry or its directorate general of petroleum concessions as is the case with exploration and production companies.”

A senior official of Baker Hughes whose services were severed early this month said the company had been operating in Pakistan for about 25 years.

According to him, the company is winding up its operations in haste and without fulfilling legal and moral obligations. “So far no approval has been taken from any government department, although companies are legally bound to get NOCs. Additionally, Baker Hughes did not announce any compensation plan for its employees.”

He said the firm’s major clients — Oil and Gas Development Company Limited, MOL of Hungary, United Energy Pakistan and Mari Petroleum — had been informed verbally or through emails about the exit plan.

An executive of a company said domestic oil exploration and production companies were taking up the matter with the government and Baker Hughes to secure legal remedies as their operations would be badly affected and they might suffer billions of rupees of losses.

An official said that instead of opting for proper and legal way of exit, the US firm had verbally informed its employees and clients about the decision and started shutting down its operations and terminating the employees. The company is using the term ‘termination’ at the bottom of service documents to get rid of the staff by offering them 2-3 salaries, though many of them had 20 years of service.

Until recently, Baker Hughes had more than 70 regular employees and 30 permanent consultants.

The official said the company had offered very lucrative packages, including two-year salary, to its employees when it left Venezuela and Germany early this year. He said the company had offered exit bonus and lucrative compensation to a selected group who were facilitating it for smooth exit and getting rid of regulatory or legal obligations.

Published in Dawn, July 25th, 2016

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