ISLAMABAD: Prime Minister’s Advisor on Finance and Revenue, Shaukat Tarin has termed liquidity crunch as a major constraint in investment at the moment in oil and gas sector despite high returns, well informed sources told Business Recorder.
He shared his views at a recent meeting of Cabinet Committee on Energy (CCOE), during deliberations on development plan of Pakistan’s oil and gas sector.
The Petroleum Division briefed the forum on the Development Plan for Pakistan Oil and Gas Sector (2020) and sought approval of the CCoE for the proposed plan.
Sharing the plan, Petroleum Division said that during the first meeting of expert panel of the China-Pakistan Subgroup on Cooperation in the Oil and Gas Sector, both sides agreed that the China Petroleum Planning and Engineering Institute, along with an expert panel of the Ministry of Energy (Petroleum Division) and its organizations/ companies shall jointly study and prepare the Development Plan for Pakistan’s Oil and Gas Industry.
CCoE set to approve oil, gas sector uplift plan today
The main objective of the plan is to assist the Energy Working Group of China-Pakistan Economic Corridor (CPEC) in finalizing its investment for the development of the oil and gas sector of Pakistan by providing a comprehensive database of information on Pakistan’s energy profile, forecasts, and various planned and agreed energy projects.
The Plan has been prepared on the basis of data and information obtained from the Government directorates, enterprises, regulatory bodies, and think tanks and has focused on projects related to exploration and production of gas and oil imports, Thar coal to liquid, strategic oil storages, refining facilities, Underground Gas Storage (UGS) system, and construction of natural gas and oil pipeline projects.
Pakistan covers an area of 881,913 square kilometres sharing its borders with India, Iran, Afghanistan and China. Pakistan has an emerging economy with GDP of $283.3 billion in 2019.
Pakistan’s E&P sector has a mix of national and international companies (24 active companies as of June 2019) operating independently. Seismic activities have increased with approximately 2,064 LKM of 2-D seismic data and 1,596 square km of 3-D seismic data acquired in 2019. Similarly, 37 exploratory wells and 67 appraisals/ development wells were spudded in 2019.
In terms of production, the average oil and gas production in 2019 stood at 89,030 BPD and 3,936 MMCFD, respectively, whereas the remaining recoverable oil and gas reserves are 568 MMBBL and 21,45 TCF, respectively.
OGDCL remains the largest exploration and production company in the country with a 45.3 per cent and 29.2 per cent share of the total annual oil and gas production in the country, respectively.
MOL is the largest private and second largest oil producing company in the country with a production share of 24 per cent. PPL, pioneer of exploration and production in Pakistan, is the second highest gas producing company in the country with a 19.3 per cent share.
Pakistan’s total primary energy supply stood at 86.3 MMTOE in 2018, registering an impressive growth of 8.4 per cent from 2017 due to introduction of newer energy supplies, i.e., LNG imports, renewable energy, coal and nuclear power projects. Indigenous natural gas is the biggest source of primary energy in the country with a share of 34.6 per cent (29.8 MMTOE).
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LNG imports continue an increasing trend with an 8.7 per cent share of the energy mix in 2019 up from 5.6 per cent the year before. Oil remained second with 31.2 percent (26.9 MMTOE) energy supply, showing a decline of 1.6 per cent from last year supply of 27.36 MMTOE.
During the discussion, Advisor to the Prime Minister on Finance & Revenue, Shaukat Tarin suggested encouraging the private sector to invest in exploration of oil and gas. Furthermore, he emphasized on the need for more investment in the public sector for exploration of the new fields.
He added that the liquidity crunch is the major constraint at the moment, in spite of high returns on investments. He suggested that Petroleum Division should consult him on this subject for future plan of action.
Minister for the Maritime Affairs Ali Zaidi recommended considering the utilization of depleted gas fields for the storage purpose. Minister for Planning, Development and Special Initiatives, Asad Umar who presided over the meeting directed the Ministry of Petroleum to consider and implement the proposal, wherever feasible.
He maintained that the proposed plan is an important document and is supported. However, it needs to have specific recommendations, tangible/ concrete expected outcome and a very clear way forward.
He further observed that the Division may convert this plan into implementation strategy by attending policy gaps, introducing incentive structures, reviewing regulatory framework and recommending necessary reforms in the sector.
After detailed discussion, the CCoE directed Petroleum Division to resubmit the plan within four weeks, after incorporating the observations as noted above, after due consultations with the relevant stakeholders.
Copyright Business Recorder, 2021