Government plans to double oil and gas production in 10 years

The government has made a plan to enhance oil production from 64,000 barrels per day to 100,000 barrels per day and gas production from 3 billion cubic feet per day to five billion cubic feet per day during the next 10 years.
To achieve this objective, the level of exploratory drilling will be increased from 30 wells to 100 wells per year, official sources in the Ministry of Petroleum and Natural Resources said on Monday.
The procedural bottlenecks relating to equipment, taxation and land acquisition have been eased to explore more oil and gas reserves.
The proven oil reserves stand at 778 million barrels. However, estimates from independent sources are many times higher. They claim oil potential to be 27 billion barrels in the country.
Similarly, discovered gas reserves are 43 trillion cubic feet, but its potential is estimated at 282 trillion cubic feet.
It means only about 2 percent of oil and 15 percent of gas reserves have been realised, sources said.
To uncap this potential, the government wants to accelerate exploration and production activity by consolidation, continuation and improvement of policy terms, besides introducing operational flexibility.
In this regard, production sharing contracts have been designed for offshore drilling with incentives based on water depth.
For onshore exploration, income tax rates have been reduced to 40 percent from earlier 50 to 55 percent.
Furthermore, the onshore zones have been redefined in the difficult areas to make the operations of exploration companies more viable. "We sincerely want that those who choose Pakistan to be a destination for their investment should have fair return on investment, and the new policy package will considerably improve investors' overall returns," sources added.
The internal rate of return for existing onshore concessions will increase from 16 percent to 19 percent in real dollar terms while government's share will reduce from 70 percent to 56 percent. The new onshore policy has also removed the main bottlenecks of supplying gas to the nearest transmission system through admissibility of pipeline tariffs.
It may be noted that import of crude oil and petroleum products accounts for approximately $3 billion annually which creates balance of trade problems. Therefore, the government is trying hard to achieve self-sufficiency in the oil and gas sector to reduce overall trade deficit.