Oil and gas production

The government's efforts to exploit natural carbon resources in Pakistan to increase the indigenous share in energy supplies have proved largely unfruitful, as local oil and gas production remained stagnant during 2004-05 to 2006-07, says a Recorder Report quoting data from an official report.
The study, which covers oil and gas production over the last three years, indicates that the country's total daily oil production in FY2004-05 was 66,079 barrels which, instead of going up, declined to 65,577 barrels in 2005-06, though it showed an upward trend in 2006-07 by touching 67,438 barrels.
However, the impact of the increase in production was not substantial enough to help Pakistan secure an increased share in the total consumption, and thereby cut down oil imports.
According to the report, things in gas production sector too displayed a similar trend, in sharp contrast to official claims, because domestic gas production in 2004-05 was 3.685 mmcfd, which increased to 3.838 mmcfd in 2005-06, but remained stagnant in 2006-07. Like oil and gas, LPG sector too displayed a mixed trend.
The production of liquefied petroleum gas increased from 1,051 tons a day in 2004-05 to 1,462 tons, showing a healthy trend, though the trend lost its vigour the next year, because the daily production could not rise beyond 1,523 tons. Experts maintain that domestic oil production over the last many years has averaged 60,000-66,000 barrels a day, depending on the activities of E&P companies, which cannot be termed a major achievement.
They believe that Balochistan and upper regions of NWFP can make a difference to the country in terms of oil and gas exploration, though the prevailing tenuous security situation there has adversely impacted exploration and production activities.
The largely stagnant trends in oil and gas sector, which our report indicates, should be a cause of serious concern to the government because energy sector serves as a catalyst of economic growth all over the world. It fuels manufacturing, power-generation and services sectors. It has been predicted that when the overall growth rate picks up, the oil import bill too will go up, putting pressure on the balance of payments unless exploration and production activities are geared up well in advance.
According to the available data, as many as 42 companies are at present working in the country, with 118 exploration licences and 127 leases. Further, OGDCL has been engaged in exploration and production work over the last four decades. Even then our exploration and production performance has not been quite enviable. According to a research study, our domestic gas production increased by 23.4 percent, while oil production registered an increase of only 6.6 percent in 2005-06.
Paradoxically enough, despite the increase in domestic production, the country's oil import bill increased by 35 percent to $4.2 billion in 2005 due to its heavy dependence on oil imports as well as the rising oil prices in international market.
This ought to have prompted the government to speed up exploration activities to offset the mounting oil demand. In 2005, our indigenous hydrocarbon production remained skewed towards gas, which is said to have accounted for 90 percent of the combined domestic oil and gas production. But here too the production level has not kept pace with the demand.
A major trade policy concern of Pakistan has been to augment its manufactured exports in the world trade, which calls for greater competitiveness of our exports. But the rising international oil and gas prices, coupled with almost stagnant domestic production will further erode the competitiveness of our exports if additional energy resources are not developed in time.
The widening gap between supply and demand has therefore put us in a desperate race for time and investment. (It is said that we will need an investment of $20.4 billion in power sector alone by the year 2013. But can we arrange this type of investment?)
The government should ask oil and gas companies currently engaged in exploration and production work in the country to undertake fast-track projects so that we are able to retain the competitive edge in international market. There is also need for the energy bureaucracy to activate its field staff to get things done speedily.
Secondly, the government should evolve a strategy to ensure a peaceful environment in Balochistan and parts of insurgency-hit NWFP so that oil and gas exploration activities can be carried out in relative peace. Only by launching a multi-pronged, pro-active initiative can the government achieve these targets.