Anticipated gas shortages

Anticipated gas shortages

Deliberate policy of abandoning offshore oil and gas exploration and stopping further investment to increase production from the already operational fields in Khyber Pukhtunkhwa and Sindh has pushed the country to face acute gas shortages within the current and next fiscal years, particularly during five months of winter from November to March. It will directly impact the productivity of manufacturing sector and that of agriculture indirectly by likely dearth of low cost fertilizers.

The situation has come to this pass because of the total indifference of last PML-N government towards accelerating oil and gas exploration activities with the personal motive to make a rational for LNG import at a highly inflated rate of $13 per mmbtu , the contract of which include the disastrous clause of ‘take or pay,’ which will continue to drain out the scare foreign  currency reserves even though the country would not need its purchase due falling demand.

The priorities of present government are also skewed on oil and gas exploration to meet the current  and future demand, notwithstanding, occasionally, beating the drum of next phase of industrialisation after achieving economy turnaround. As reported in print media, Special Assistant to the Prime Minister on Petroleum, Nadeem Babar gave a stereotype assessment of gas demand and supply situation and dwindling production from operational reserves and perhaps he had no vision how future demand can be met in the long term. Is it not his mandated responsibility to focus on working out a long term hydrocarbon policy? Has the recent petrol shortages not served a bitter lesson? 

Pakistan’s current gas production is 4 billion cubic feet (bcfd) per day.  And exploited local production will decline to 2.260 bcfd by 2021 if new deposits are not explored. At present consumption of gas is 5.395 bcfd which will jump to 8 bcfd within the next few years. The Council of Common Interest, in the previous meeting, had approved an attractive incentive package at $40-41per barrel of crude oil in the high risk areas of Baluchistan and tribal districts of Khyber Pukhtunkhwa but foreign oil and gas companies have not shown interest in oil exploration and production in these areas. It makes the role of OGDCL and other Pakistani companies more crucial in oil and gas exploration and production, provided in charge of Petroleum Division changes his mindset of giving preference to gas import instead of streamlining exploration and production activities.

The government of provinces with rich reserve of oil and gas had all along complained against the PML-N federal government failure to auction exploration blocks which hindered the exploration and production of oil and gas. The production from the already operational oil and gas wells was not increased in Khyber Pukhtunkhwa and Sindh, causing losses of billions of rupees in royalty to these provinces. It is worth mentioning that in Khyber Pukhtunkhwa not even a single block had been put up for auction since 2014 out of 35 identified sites. The lease agreements which were struck before 2012 had expired and no effort was made to renew them in the national interest. This deliberate neglect accrued a loss of Rs.20 billion in royalty earning to the federal government and Rs.8.8 billion to the provincial government per year.

The most appreciable work of oil and gas exploration had been done during 2000-07.Significant discoveries had been made in four Southern Districts of Khyber Pukhtunkhwa. The expected requirement in future for e planned nine special economic zones is yet to be calculated. Hopefully, the auction of already identified blocks in the no risk areas will materialize soon and the incentive package approved by the CCI in 41st meeting for high risk areas will attract investment by multinational oil and gas companies.

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