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Dollar free fall only after oil & gas indigenous production to sustain Pakistan economy

Oil & Gas is life line of any economy. Oil & Gas producing countries have become advanced states with higher per capita. Although Pakistan is rich in Oil & Gas resources yet the import lobbies and commission agents have kept it poor; forcing it to carry the begging bowl. Import of Oil & Gas is the largest reason of dollar drain and free fall of Pak Rupees. Pakistan imports $16 to 20 billion annually but if this drain of dollars is replaced with indigenous Oil & Gas then Pakistan does not have to beg IMF, China, UAE or KSA and dollar will free fall to Rs 30 from Rs 160. This will cause reduction in prices, better education, creation of jobs, enhanced exports and improvement in quality of life. With $16-20 billion in hands the destiny of Pakistan can be turned around in 4 to 5 years; with some $8 billion of forex saved by 2021.

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Of course, Pakistan needs to make investor friendly policies in the hydro, solar, wind and alike alternate and renewable energy resources to have these asap, yet let there be no doubt that without oil and gas, our economy would be in shambles – atleast till 2040. The World Energy Outlook by international agencies, including world institutions of repute like International Energy Information Agency (IEIA) in high clarity has given a verdict that atleast till 2040 the world as a whole and developing nations specially will remain highly dependent on Oil and Gas. The oil and gas demand is here to stay till 2040. Middle-East is spending $25 billion to build new grass root refineries, North America $12 billion, Europe $5 billion, and South-East $20 billion. The readers may note that KSA/Aramco intends to build a refinery complex worth $10 billion in Pakistan and $20 billion worth in India – for what; for on coming high demand of petrol, diesel, jet fuel. One surprise, contrary to most off the cuff analysts speeches, the worldwide furnace oil demand will remain at 7 million barrels per day till 2040. Therefore, Pakistan may not lower it guards when it comes to Oil and Gas. Pakistan needs to aggressively work on production of Oil and Gas to make its economy robust, double digit GDP growth, create job opportunities and make dollar come to its well-deserved parity of Rs 30.

Pakistan has all the ingredients to be self-sufficient in oil and gas within the tenure of this Government. Thus, causing free fall of $ to Rs 30. Gas average sale price can be halved; increasing exports, jobs, GDP.

Pakistan has tremendous Oil & Gas resources which is one pre-requisite to self- sufficiency. Pakistan is estimated to have Oil & Gas resources:

  1. Oil 27 billion barrels.
  2. Gas 150 Trillion Cubic Feet TCF (i.e. 15 times of Sui size).
  3. Shale Gas 550 Trillion Cubic Feet TCF (i.e. 50 times of Sui size).

In financial terms, at 75% recovery factor and import parity price prices the value of Oil & Gas resources is estimated as follows:

  1. Oil: 27 billion barrels x 75% x $50/barrels = $ 1 trillion.
  2. Gas: 150 TCF x 75% x 920 BTU/CFT = 100,000 trillion BTU = 100 billion MMBTU x $10/MMBTU = $ 1 trillion
  3. Shale Gas: 550 TCF x 35% x 920 BTU/CFT = 175,000 TCF BTU = 175 billion MMBTU x $10/MMBTU = $ 1 trillion

In short, Pakistan has recoverable oil and gas resources worth $3 trillion or $120 billion per year for next 25 years. Plenty to off-set all petroleum imports for next couple decades and bring prices of petrol, diesel, jet fuel considerable low and gas down by half. We need to get off the LNG fever and get on the indigenous fever.

 

Present, annual indigenous production and consumption are as follows:

  1. Oil consumption is 500,000 barrels per day (182 million barrels per year), while indigenous production is meagre at 85,000 barrels per day (31 million barrels per year), low at 17% only.
  2. Gas constrained demand is 4,500 million cubic feet per day (1.6 trillion cubic feet per year) while indigenous production is 3,900 million cubic feet per day (1.423 trillion cubic feet per year).
  3. Gas unconstrained demand is estimated at 8,000 million cubic feet per day.

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Pakistan can easily produce 1 million barrels of oil per day (and 2 million barrels per day with concentrated efforts) and 8 billion cubic feet per day; thus not only getting rid of the menace of electricity & gas load shedding and low pressure but putting GDP into double digit increase and saving $16 to 20 billion of foreign exchange.

Pakistan has $3 trillion worth of Oil/Gas. Why wait?

All the necessary ingredients exist in Pakistan those are necessary for production of Oil & Gas, i.e. vast proven petroleum system, seepages (very few countries have this blessings), sedimentary basins, right source rocks, traps, seals, opening of FATA, generous petroleum policies, accurate petroleum rules and a willing government. Missing is the right person for the right job – in terms of vision, decision making acumen and management expertise. Pakistan has had major geological and geophysical studies already done that show tremendous potential, such as Petroleum Habitat Study (MPNR-1986), Basin Study (OGDCL-2010), Shale Gas/Oil Study (DGPC-2018), Sweet spots Shale Study (KPOGCL-2017), sizable 3D/2D Seismic Data Acquisition and 1100 Wells and umpteen field studies. Pakistan is much advance than many other countries in respect of have a one-window repository/storage at DG PC operated by LMKR, a world repute geological data company. Furthermore, Pakistan has data bases, such as PPIS (Pakistan Petroleum Information System), EMS (Exploration Management System) & CMS (Concession Management System) developed by international companies and housed in DGPC. Fortunately, all four provinces have high prospectivity of oil and gas. With such wealth of petroleum systems and information avenues there is no reason why Pakistan can frog-leap to self-sufficiency in oil/gas within the rule of the present government. Mr Nadeem Babar, Special Assistant stated in his key note speech at the annual conference of the Petroleum Institute of Pakistan that the next wave of policies shall be ‘compliance not approval’. These three words were very well with the investors and management.

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