EDITORIAL: Federal Energy Minister Muhammad Ali’s revelation that up to 70 percent area in Pakistan is still unexplored and needs to be evaluated for oil and gas exploration to reduce the fuel import bill raises more questions than answers.
The first one, quite naturally, being why hasn’t any administration so far got the ball rolling on this matter even as the exchequer struggled with unbearable oil imports over the past few years.
He was speaking at the 29th Annual Technical Conference (ATC), where 1,200 local and international delegates showcased technology and presented papers, so the setting was right to engage industry experts as Pakistan looks to expand its options and operations.
The minister also disclosed that 24 oil and gas wells would be auctioned in two phases in the coming months, for which both domestic and international companies would be encouraged, and it remains to be seen if participants at the ATC show any interest.
Regardless, the official oil and gas policy seems more ad hoc than well planned, considering that it requires long-term planning, which has clearly been missing.
Leaving a good 70 percent area unexplored amounts to deliberately keeping the country hostage to the supply constraints and price swings of the international markets, which ought to be unacceptable, yet here we are.
Countries, like Pakistan, that rely on imports for a large part of their domestic needs learned a very hard lesson during and after the Covid shutdowns. Yet, it turns out, our situation is different from others that know they don’t have any more oil or gas reserves, since we haven’t yet taken the trouble to complete exploration and evaluation exercises – the first step in the cycle.
And even though a caretaker minister has pointed out this shortcoming, there’s still no telling when the long, complicated and quite expensive process of exploring such a large area will start; or if work has even started on the initial feasibility.
Similar ad hocism is evident in the oil import regime as well. The government has been working on diversifying oil imports for quite a while, and there’s still no final word on shifting to Russian oil or which currency would be used for payment.
India, for example, has been importing Russian oil for decades, which enabled it to conveniently sidestep American sanctions since the onset of the Ukraine war, and it didn’t take long to work out a payment mechanism in UAE dirhams; with a fall back plan in place to use Indian rupees in case dirham payment is also sanctioned.
Islamabad, on the other hand, did no such homework and even this far behind the curve, hasn’t moved beyond mere statements at least as far as the currency swap is concerned.
One can only hope that the exploration work will begin soon enough. Surely, the government doesn’t need to be reminded that unstable oil price, because of fluctuations in the international market, also feeds inflation, especially food inflation, in the country.
And since these are times of historic inflation, and the economy is under more strain than it has ever experienced before, now is as good a time as any to explore all areas for oil and gas reserves; hopefully reducing the load on the exchequer in the future.
Copyright Business Recorder, 2023
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