Ineptitude, snags, inconsistent policies and smuggling causing loss to national exchequer
Strategically located Balochistan is surrounded by oil and gas rich countries like Iran and Afghanistan and Arabian Gulf region states. On one hand, the province is located in midst of oil and gas reserves while on the other the most important international sea routes pass through this province coast. By virtue of its geographical location, the province is considered a strategic part of trans-national pipeline corridors, which are currently in the planning stage.
The province has the country’s extensive oil and gas reserves. According to an estimate, out of the Pakistan’s estimated 25.1 trillion cubic feet (tcf) of proven gas reserves, 19 trillion are located in Balochistan. According to another estimate, out of the country’s proven oil reserves of 300 million barrels, largely are located in the province. Other sources place its oil reserves at an estimated six trillion barrels of oil reserves both on-shore and off-shore. The question then arises, if Balochistan has proven reserves of oil and gas, then why the exploration, production and drilling activities have so far been too slower in the province? Why does the country still lack a comprehensive program for on-shore and off-shore oil exploration in Balochistan? What have been the snags, hurdles or constraints for tapping the energy resource potential of the province? Undeniably, shy investment in oil and gas sector and the security concerns in the province have been the key reasons for slower growth of the sector, but there is presumably another issue related to Iran’s reservation and concern over drilling of oil wells in Balochistan.
Balochistan borders Iran, which is rich in oil and gas resources. Some observers believe that discovery and drilling of oil wells in Balochistan may cause Iran’s oil to flow towards the province, which is physically located below the level of surface in Iran. Some independent analysts have even claimed that Pakistan is bound for not drilling oil wells in southern Balochistan under a deal with Iran, as the neighboring country would lose most of its oil for its flow toward lower landscape.
The geographical view and the landscape in Iran further reinforce the idea of oil flowing from upper surface in Iran to lower surface in Balochistan. With an area of 1,648,000 square kilometers, Iran is located in southwestern Asia. It shares its northern border with the Russia. Its western borders are with Turkey in the north and Iraq in the south. Its southern border is formed by the Persian Gulf and Gulf of Oman littorals. Its eastern borders are with Afghanistan on the north and Pakistan on the south. Iran’s high interior basin is surrounded by a series of mountain ranges. Most of the country is above 1,500 feet, one-sixth of it over 6,500 high, depicting a sharp contrast to its coastal regions, which are outside the mountain ring.
In geographical perspective, if one sees from Iranian side, Balochistan is located on south of its eastern borders. In the north, the 400-mile strip along the Caspian Sea falls sharply from the 10,000-foot height to 90 feet below sea level. In the south, the land drops away from a 2,000 foot plateau, to meet the Persian Gulf and the Gulf of Oman.
Is there any reality in Pakistan’s deal with Iran for not drilling oil wells in Balochistan? Excluding Sui gas field, no local or foreign firm has so far not been successful in completing a significant oil exploration work in Balochistan. Any company had to quit the project for this or that reason. Security has been the main reason or pretext.
In view of the fact that the experts have emphasized the need to open Balochistan for exploration to overcome a potential energy shortage, the province’s huge potential for oil and gas exploration should be tapped by granting maximum exploration licenses to foreign and Pakistani oil and gas exploration companies. If there is any deal with Iran with regard to oil exploration in south western areas of the country, then facts should be unfolded by the government.
IRANIAN FUEL SMUGGLING
Approximately entire population living in border areas in coastal Balochistan is dependent and linked with the business of selling smuggled Iranian oil and the local people are operating the filling stations at different point in far flung areas. Smuggling of Iranian petrol and diesel in Balochistan is inflicting an annual loss which is in billions of rupees to the national economy. There has been a demand from the local people for legalizing this oil trade. According to Balochistan Customs, diesel is being smuggled through the Makran division, especially the Panjgur, Kech and Gwadar routes. Last year the Customs officials seized around 2.815 million litres of oil from different part of Balochistan and saved Rs179.03 million in revenue losses. The province lack fuel stations particularly in far off places. That is why the illegal and unregistered filling stations have witnessed a steady growth in the entire province.
Iranian fuel smuggling has been carried out through Gwadar, Kech (Turbat) and Panjgur districts for the past three decades. The people in Jiwani and Pasni bring Iranian petrol and diesel illegally to Gwadar and then it is shipped to Karachi. The oil tanker drivers have to pay handsome amounts in bribe to the Pakistan Customs, Coast Guard and other security agencies to cross the check posts. The petroleum marketing companies are also involved in the smuggling of Iranian oil in a bid to save taxes and duties.
A recent Reuters inquiry into the fuel trade, revealed that sanctions on Iran has made diesel smuggling extremely remunerative. For years, diesel smuggled from Iran has supplemented the 2.7 million to 3 million tons (20 million to 22 million barrels) of diesel that Pakistan’s state oil company buys from the Kuwait Petroleum Corp each year.
The findings also raised questions about the possible degree of complicity in fuel smuggling among Pakistani security forces stationed in Balochistan. There is no way to reliably measure the amount of fuel involved, but traders believe that 100-130 tankers — each capable of carrying 25,000-40,000 liters — are filled with illicit Iranian diesel in Balochistan each day. The tankers then deliver the fuel to markets across Pakistan.