Energy (Oil & Gas)

Overview

Pakistan’s produces about 60,000 barrels of oil per day which only meets approximately one sixth of the country’s current oil requirement. The balance amount is imported at a staggering cost of US$2.5 Billion. In view of the increasing demand and the current decline in production this cost is going to increase substantially over the next couple of years.

The demand for natural gas is exceeding supply due to increased usage in the domestic, industrial and power generation sectors. Apart from this, Pakistan does not have the necessary infrastructure to cope with the increasing volumes of imported oil and requires substantial investment to support this infrastructure. The Privatisation of the units in the oil and gas sector will not only increase the operational efficiency of these units but also contribute towards new injection of investment.

Policy

The Petroleum Policy of 1994 assisted in the development of the upstream sector. The Policy, however, could not arouse sufficient interest to attract interest in the downstream sectors, off shore areas and the Baluchistan Basin.

The 1997 Petroleum Policy is based on a review of the 1994 Policy and offers major incentives in the upstream and downstream petroleum sector,, including a package based on production sharing arrangements for offshore areas. The Policy focuses on mobilization of greater resources and promotion of private sector investment in the oil and gas sector.

Efforts are being make to exploit the existing energy resources to build a strong indigenous exploration and production base. These efforts are directed at achieving cost effectiveness, reduction in import dependence, promotion of self-reliance through accelerated exploitation of energy resources and minimum environmental degradation.

In addition, a number of far-reaching measures have been taken which include attracting private foreign investment, creating a qualitatively improved infrastructure in oil and gas industry, development of an efficient and transparent management, deregulation of downstream petroleum marketing sector and rationalization of prices and LPG allocation.

A new package for offshore exploration has been prepared for attracting exploration investment in off-shore areas which has so far remained relatively limited. A separate Holding Company, Gas Regulatory Authority and Petroleum Regulatory Board are planned to be established for privatization. The privatization of SNGPL and SSGCL is under process. The import of LPG has been liberalized to promote investment in import of LPG, storage and infrastructure on the basis of commercial opportunities and risk. This would facilitate those areas of the country, which are not yet connected with pipeline network.

Statistics

The major sources of commercial energy supplies in the country include oil, gas, coal, liquefied petroleum gas (LPG), hydel power, thermal power and nuclear power. The quantum of energy supplies from these sources during July-March 1996-97 stood at 124.97 million barrels of oil/petroleum products, 522,768 Mcf of gas, 43,605 kWh of electricity and 2,366 thousand tones of coal. Out of the total commercial energy supplies in the country during July-March 1996-97, oil accounted for 42.70 percent followed by gas (37.68%), hydel power (14.14%), coal (5.30%) and nuclear power (0.18%).

Oil is the largest source of energy supply accounting for 42.70 percent of total supply during July-March 1996-97. Oil by and large is an important source of energy. However, an increasing proportion of oil requirement is being met from domestic production.

Next to oil, natural gas is a major source of energy accounting for 37.68 percent of the total energy supply. Apart from being a cheap source of energy for domestic consumers, it is a feed stock for chemical fertilizers and a major source of energy for thermal power and cement plants.

The country has recoverable gas reserves of 20.814 trillion cubic feet. The average production of gas during July-March, 1996-97 was 1,909 million cubic feet per day against 1,806 million cubic feet per day during July-March 1995-96. Main companies currently engaged in exploratory and development activities are LASMO, MGCL, OGDC, OXY, POL, PPL and UTP.

The country has recoverable oil reserves of 209 million barrels. The average oil production during July-March 1996-97 was 58,784 barrels per day of which 22,154 barrels per day was produced in the northern region and 36,630 barrels per day in the southern region. The oil production in the northern region declined due to natural depletion of oil fields.