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Oil price surge, proven reserves

Minister for Maritime and Foreign Affairs, Abdullah Hussain Haroon said on Friday the Excom Mobil has indicated that it is close to hitting huge oil reserves near the Pak-Iran border, which could be even bigger than the Kuwait reserves. Addressing business leaders at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) the minister said that Excom Mobil—an American multinational oil and gas company—has so far drilled up to 50000 meters close to the Iranian border and is optimistic about the oil find. He said that government of Pakistan has already taken an undertaking from the company to set up a generation complex worth $ 10 billion.

The prospects of oil and gas finds in Baluchistan have always been high. But ever since lat 60s, the initiative of oil exploration has been taken the province has witnessed a sudden wave of insurgency ignited by the world and regional powers to deprive Pakistan from exploiting the natural resources of this province. Even political instability was created all over the country. It is a good omen that the latest wave of insurgency that started 12 years ago has almost ended. However, incidents of terrorism still occur. The new governments at the center and in the province of Baluchistan will have to closely coordinate to provide a peaceful and secure environment for oil and gas exploration joint ventures between the multinational and national companies.

National oil and gas companies have also made commendable achievements in oil and gas exploration and production. The noteworthy success story is that in the year 2000 Oil and Gas Development Company explored oil and gas reserves in collaboration with Zever Petroleum in Shakardara area of Kohat district in Khyber Pukhtunkhwa. In the succeeding years of President Musharraf government, OGDC in collaboration of multinational companies succeeded in more oil and gas reserves discoveries in KP Southern districts of Hangu, and Karak. These are now oil and gas producing districts whereas Lakki Marwat has also proven oil and gas reserves. But over the past 10 years the successive governments of PPP and PML-N failed to undertake exploration work for more oil and oil and gas reserves exploitation. The PML-N government even frustrated the PTI provincial government efforts to set up an oil refinery and gas run power plant in Karak district.

It is encouraging that now a Government Holding (Private) Limited (GHPL) is working on a plan to enhance its share holding in oil and gas fields that have proven reserves with objective of ramping up domestic energy reserves to meet the growing demand of the country. GHPL, which is 100percent owned by the government, monitors and manages government’s working interests in upstream on shore and offshore oil and gas fields. With 133 joint ventures including 51 exploration licenses and 82 development and production leases, GHPL is the fifth largest Exploration and Production Company in Pakistan. It is working with foreign operators and the proposed the plan would attract other companies to follow the model.

Notwithstanding the high priced the shady deal with Qatar, liquefied Natural Gas has given some breather but the solution lies in focusing on exploiting the domestic oil and gas reserves. Besides injecting the capital, GHPL expects foreign investment of hundreds of million dollars through farm-in initiatives with sufficient gas flows into the system along with thousands of barrels of oil production. These new initiatives will also contribute to the national exchequer in terms of dividend, taxes, royalty and creating new jobs. Apart from the strategic initiatives, capacity building programmes have been planned and massive investment will be made in new software and hardware to upgrade data analysis and MIS.

GHPL is a lean organisation compared with other public sector exploration and production companies like Pakistan Petroleum Limited and Oil and gas development Company. This provides an excellent opportunity for lucrative returns as overheads and operational expenditures are very low. These factors will give impetus to exploration and production activities of national and multinational companies that can get access to a strong database for inve3stment in upstream oil and gas sector of Pakistan.

The surge in oil prices in the world market has increased the import bill to $ 5 billion annually. Pakistan is short of foreign exchange and the Islamic Development bank has re-activated the credit line of $ 4.5 billion to finance the oil import bill of Pakistan. Consumption of petroleum products is on the rise. It rose by 9.4 percent in 2017, leading to higher import bill. The demand is set to go up more following the increase in CPEC related activities. Based on the GDP growth of 7 percent, Oil and Gas Advisory Committee report forecasted that annual demand of petroleum products will reach around 55 million tones in 2030 from the 2018 estimated demand of 29.6 million tones. It necessitates fast tracking efforts for boosting domestic oil production.

 

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