KARACHI: Pakistan’s security situation drove away exploration and production (E&P) companies in the oil and gas sector, which were quite active by late 90s, said Muhammad Asim Subhani, Director New Business and Subsurface (formerly ENI Pakistan Limited) on Tuesday.
He was speaking during a webinar — organised by the CFA Society Pakistan — on “Demystifying Pakistan’s Oil and Gas Sector”.
Subhani gave an extensive overview of the country’s oil and gas sector and listed law and order situation as the key reason that discourages companies from working in Pakistan
Talking about the challenges of the E&P sector from the global perspective, he pointed out that the main challenge was law and order and the high cost of security. He said joint action was needed to address this issue, so new investment could be attracted to the country’s E&P sector.
“All stakeholders’ i.e. federal, provincial governments and tribes should put together their heads to address this concern”, Subhani proposed while pointing to the high security expenses as another reason of discouragement from the sector.
Pakistan is an energy deficient country, which relies heavily on imported fuels. To cut down the energy import bill, the country would have to focus on indigenous production of oil and gas.
Other than the security concerns, Subhani also pointed out some other challenges that were being confronted by the E&P sector in the country.
He noted that taxation issues are another key challenge, which should be tackled to attract investment in this sector followed by delay in payment to the companies.
This is followed by the massive circular debt in this sector, which has pushed the companies into financial troubles.
Also Time to Market (TIM) in unexplored basin is another major challenge to the sector.
However, he mentioned that the E&P sector in Pakistan also has certain strengths when seen in the global perspective.
Subhani said that the demand and supply gap offers a huge potential to the companies in this sector, whereas there is a vast explored area, which can be offered to both local and foreign investors for further development.
He also appreciated the mature regulatory framework of the country’s E&P sector, as well as the well-defined policies that could be offered to those interested in putting in their money.
Highlighting another key strength of the sector are model agreements, which are in place and guarantees off take of the energy products through state-owned buyers.
The director also lauded the skilled labour force in this sector, which the country offers to attract the investment. He talked about offshore exploration and said that very little work has been done on this side, which needs to be expedited.