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Energy-rich Balochistan can be a money-making for Pakistan

Present govt must formulate an aggressive exploration policy for the province

Present government led by Prime Minister Imran Khan needs to formulate an aggressive exploration policy for energy-rich Balochistan. Strategically located province is surrounded by the countries like Afghanistan, Iran, and Arabian Gulf states, which are rich in oil and gas reserves. While on one hand it is located in midst of oil and gas reserves, on the other the most important international sea routes pass by the Balochistan coast. 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 onshore and offshore.

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 should not be limited to Marri-Bugti tribal area but other districts- Sunny Shoran, Kharan, Zarghoon area, Chaghi, Lasbela, Bolan, Makran and coastal regions may be explored. Geological reports confirm huge reservoir of Petroleum and gas in Kalat, Kharan, Kohlu and Lasbela districts in Balochistan.

Present 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 and it is in Balochistan. 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.

There is presumably another issue related to Iran’s reservation and concern over drilling of oil wells in Balochistan. If the new government led by Prime Minister Imran Khan seriously takes the initiative of boosting drilling activity in the province, then it will be a game-changer initiative that can answer the many unanswered questions in this regard. 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? 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 the 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 secret deal with Iran, as the neighboring country would lose most of its oil for its flow toward lower landscape.

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