Overcoming the chronic energy shortage in Pakistan is going to be the huge challenge for the upcoming government, which will take oath this month after July 25 general elections. Time calls for opening up the resource-rich Balochistan for investments in oil and gas sector, as the acute gas shortage has led to the closure of many industrial units rendering thousands of people jobless across the country.
Balochistan offers great opportunities in oil and gas exploration sector for local and foreign investors. The exploration projects can open up the province converting it into a land of opportunities for foreign investors. Oil and gas exploration in Balochistan not only be limited to Marri-Bugti tribal area but other districts — Sunny Shoran, Kharan, Zarghoon, Chaghi, Lasbela, Bolan, Makran and coastal regions can also be explored. Also geological reports confirm huge reservoir of petroleum and gas in Kalat, Kharan, Kohlu and Lasbela districts of Balochistan.
The new government needs to focus on exploration of indigenous oil and gas reserves. It has been observed that gas available from the new discoveries made by foreign companies is much costly than the gas produced by the Pakistan Petroleum Limited (PPL) at Sui in Balochistan. Therefore, the exploration option will be more practical and viable in economic sense and it would also be rational to explore the indigenous energy resources than to go for import of gas from other countries.
In July 2015, former Balochistan chief minister Dr Abdul Malik Baloch had imposed a ban on new projects of oil and gas exploration in the entire province in order to press the federal government for the devolution of petroleum and natural resources in accordance with the 18th Amendment of the Constitution. Last year, the Balochistan’s former chief minister Nawab Sanaullah Khan Zehri approved agreement to give Sui Gas Field to PPL on lease for next 10 years period. Under the new agreement, Balochistan will get Rs 74 billion royalty during 10 years in connection with Rs 7.50 billion annual royalty. Under the agreement, PPL would spend Rs 20 billion for exploration of new reservoirs of oil and natural gas. PPL is the country’s largest exploration and production company, which has been dominating the arena of oil and gas exploration for many decades in Balochistan. It is the operator of the country’s oldest Sui gas field in Bugti tribal area. Around 23 percent of the total national output of natural gas is being exploited from Balochistan, including 18 percent from Sui gas field in Bugti tribal area. Sui is still the single largest gas field in Pakistan.
At present, the Sui gas field produces around 800 MMscf of natural gas daily from 87 wells completed during 50 years of production. It is the pioneer gas producing field. Drilling at Sui well No. 1 commenced on 10th October, 1951 by Burmah Oil Co. (Pakistan Concessions) Ltd. Natural gas was encountered at a depth of around 4000 feet. However, in search of oil, drilling was continued to final depth of 10049 feet. In 1952, PPL discovered a huge natural gas field at Sui in Bugti tribal area of Balochistan. It was the seventh largest gas field in the world and the biggest in Pakistan at that time. From that day the natural gas got name and fame as ‘Sui gas’ all over the country. Commercial exploitation of the field began in 1955. Since then the Sui field has been meeting a significant amount of the Pakistan’s energy requirements.
From economic point of view, Sui gas field is of immense importance for the country. It is the single largest source of energy supply for different industries, power generation, agriculture, commerce and household use in the country. Gas from Sui is also used for the manufacture of fertilizer and other chemicals. The quantum of natural gas production from Sui gas field is a vital source of huge foreign exchange savings for the country as the same would have been spent on the import of energy had the gas reserves in abundance not been discovered. Unfortunately, the province has been deprived of its due share in terms of royalty and economic benefits.
As the consumption of Sui gas increased manifold, the pressure depleted to a level of 45 bars. PPL installed a most sophisticated state-of-the-art compressor station costing the company millions of dollars. At present, the Sui Field Gas Compressor Station stands tall and works at 99.9 percent efficiency level. Sui Southern Gas Company Limited (SSGCL) to purify gas produced from Sui Gas Field operationalized the Gas Purification Plant (Plant) at Sui.
Balochistan has been demanding of the federal government to transfer entire ownership of the PPL to the province on the ground that the provincial energy resource had kept on feeding the country’s energy requirements since independence. The ownership of PPL could become a source of revenue to the cash-strapped province. Some technical and legal issues were involved in the strategic sale of PPL’s majority shareholding. A significant issue was the formal transfer of PPL shares to the Balochistan government. The federal government, however, did not accept the Balochistan’s demand regarding the ownership of PPL.
Security is the main issue related to the energy sector development in Balochistan.
According to one estimate, as many as 25 blocks of oil and gas were closed and 16 blocks had been opened with the co-operation of Balochistan government during past 10 years. The government needs to explore indigenous oil and gas reserves. In January 2005, the law and order problem at Sui in Dera Bugti district had led to the countrywide gas load-shedding for many days, as the damaged gas plants at Sui were to be repaired. Millions of households faced gas shortages in the country after the main gas plant was hit during clashes between security forces and Bugti tribesmen.
he government must endeavor for a political solution to the Balochistan problem. Peace is vital to launch oil and gas exploration projects in the province. Talks should be held with the Baloch leaders to expedite exploration activities in the province. A peaceful Balochistan is important to achieve energy security objective in national arena.