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March 31, 2019

Self sufficiency in oil

Opinion

March 31, 2019

There are 208 million Pakistanis that collectively export goods and services worth $24 billion a year. Lo and behold, we end up spending more than 60 percent of our export earnings to import oil. Plus, we import $2.5 billion worth of LNG and a billion dollars worth of coal. Lo and behold, we end up spending 75 percent of our export earnings to import our energy needs. We need not.

We need not spend 75 percent of our export earnings to import our energy needs. A report titled ‘Self sufficiency in oil and gas’ by Engineer Arshad Abbasi should be taken seriously. “The domestic oil and gas sector has enormous potential”, writes Abbasi. Currently, indigenous crude oil meets only 15 percent of our total requirement. According to the United States Energy Information Administration (EIA), “Pakistan may have over 9 billion barrels of petroleum oil…” That is 73 years worth of consumption.

Imagine: we may have over 9 billion barrels of petroleum oil but we are producing a meagre 90,000 barrels a day. According to the EIA, “Pakistan holds sizeable shale gas reserves of 105 trillion cubic feet (Tcf).” That is 76 years worth of consumption. Imagine: Pakistan holds 105 trillion cubic feet of natural gas but we are producing a meagre 3.2 billion cubic feet a day.

We are short on success stories but Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL) is “a unique success story”. Imagine: even as the ‘war on terrorism’ was being fought, KPOGCL managed – with security help from Pakistan Army – to take oil production from 30,000 barrels per day in 2013 to 54,000 barrels per day by 2017. Imagine; KP is now producing roughly 60 percent of our total production.

Question 1: If India has found 3.6 billion barrels of reserves just across the border from Nawabshah, Badin and Khairpur why can’t we do the same? Question 2: If the Bhagyam Oil Field just across the border from Nawabshah, Badin and Khairpur can produce 200,000 barrels a day why can’t we do the same? Question 3: Why have we pushed all international oil companies out of Pakistan? Question 4: Why has foreign direct investment in the oil and gas sector gone down from $502 million five years ago to $73 million (July-November 2017)? Question 5: Why are we sitting on oil and gas discoveries that have not been connected to the national grid? Question 6: Why is 65 percent of Pakistan still unexplored?

Hurdles (as per the report): One, an obsolete petroleum policy. Two, over-regulation. Three, poor policy formulation. Four, poor implementation. Five, ambiguous petroleum policies. Six, lack of commitment. Seven, the 18th Amendment.

For one reason or another, we are bent upon importing 85 percent of our oil needs. For one reason or another, we are bent upon importing LNG. We need not spend 75 percent of our export earnings to import our energy needs.

Recommendations (as per the report): One, a new Hydrocarbon Exploratory Licensing Policy. Two, an independent, professional upstream regulator. Three, Open Acreage Licensing. Four, removing regulatory uncertainty caused by the 18thAmendment.

Conclusion 1: Pakistan’s first and foremost goal should be self sufficiency in oil and gas. Conclusion 2: We are not even looking for onshore oil and gas. And we have now pinned all our hopes on offshore oil and gas. We don’t want to get oil and gas that is a mere 200 meters deep. And now we are pinning all our hopes on finding oil and gas 5,000 meters under the seabed.

The writer is a columnist based in Islamabad.

Email: [email protected] Twitter: @saleemfarrukh