Cover Story
INVESTMENT IN OIL AND GAS SECTOR |
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Turkmenistan-Pakistan pipeline project is vital
By AMANULLAH BASHAR
Dec 06 - 12, 1999
Persistent political disturbance in Afghanistan is a major setback to
bring peace and prosperity not only in Afghanistan but for economic growth in Pakistan.
The $2 billion Turkmenistan-Pakistan gas pipeline project which
promises economic growth by attracting foreign investment in Pakistan at a massive scale
and development of downstream industries is suffering due to political disturbances in
neighbouring Afghanistan.
A persistent war-like situation in Afghanistan is the cause of delay in
implementation of gas pipeline project. Whereas a consortium of international oil
companies have already arranged the finance while an accord on gas price between
Turkmenistan and Pakistan governments has also been reached.
According to a report the only reason for the delay in laying the gas
pipeline from Turkmenistan to Pakistan via Afghanistan is that the United Nations has not
yet accorded recognition to Taliban ruled government in Pakistan.
According to an energy expert, delayed pipeline project is precluding
Pakistan from taking advantage of speedy development of its energy sector, reduction in
huge import bill on account of oil and also using gas as a substitute for its large scale
manufacturing sector such as cement, fertilizer and electricity generation. The pipeline
not only will offset the cost push use of oil for power generation but provide a
respectable base for export of the natural gas having a much larger market in this part of
the world including India.
Meanwhile energy sector in Pakistan has succeeded to increase its
production of oil by 10.5 per cent as compared to last year from local resources and is
poised to gain a 6,236 barrel per day during current fiscal of 1999-2000.
Official sources told PAGE that gas production during 1999-2000
in Pakistan is planned to be 2,404 million cubic feet per day against the estimated
production of 2,024 MMCFD in 1998-99 showing an increase of 18.8 per cent in overall
production of natural gas in Pakistan.
A total of 45 wells, both in public and private sectors are planned to
be drilled during 1999-2000 comprising 20 exploratory and 25 appraisal and development
wells.
In 1998-99, 44 wells comprising 18 exploratory and 26 development well
were drilled. Similarly, in Liquid Petroleum Gas (LPG) production which progressively
increasing its demand in the country is estimated at 656 tonnes per day while in the
outgoing year the production of LPG was 478 tonnes per day which was 82.4 per cent of the
production target. The Union Texas Pakistan is also working on development of a LPG
project near Hyderabad.
According to official figures, Oil production during 1998-99 was 55,422
barrel per day against the target of 61,904 barrels, showing 89.5 per cent achievement.
Meanwhile arrival of Pak Arab Refinery near Multan sometimes next year
will be another milestone in the refining sector of Pakistan.
While on the existing refinery sector side Attock Refinery has already
upgraded its refinery capacity which has been increased to 35,000. With the increase
capacity of 35,000 BPD the refinery shall process the entire crude oil produced in the
northern region while balance requirements being fulfilled by transporting crude from
Southern region, which would yield substantial freight savings to the government.
Former government had set a budget target of Rs63.3 billion for the
energy sector which was 48.4 per cent higher as compared with Rs43.4 billion of the
previous year. It is yet to be seen how the present government led by Gen. Pervez
Musharraf deals the oil and gas sector in its economic package expected to be announced in
the second half of the current month, sources said. New government however has already
started taking interest in the speedy development of oil and gas sector and has accorded
new licenses to oil and gas exploration companies recently. The upcoming 6 gas fields
which are near to completion, the government target to increase the existing production of
2,024 mmcfd to 2404 mmcfd seems to be an easy target. The Uch gasfield operated by Oil and
Gas Development Corporation(OGDC) is already in the trial production of about 250 mmcfd,
it is learnt, while other fields which are also near completion may add a substantial
amount of the much needed gas to the main supply system.
All these developments in the energy sector of Pakistan though would
provide a relief to some extent however they are insufficient to address the huge energy
problem faced by the country.
According to informed sources, the gas price accord reached between
Pakistan and Turkmenistan is highly desirable due to its nature of cheapest oil pricing
mechanism. It is learnt that the imported gas through the proposed pipeline would be
cheaper even than the locally produced gas.
Each citizen of Pakistan is heavily taxed in terms of POL prices as
over 70 per cent of the oil price goes into tax net under the title of development
surcharge. While the oil prices are already on higher side in Pakistan, IMF is again
pressurising the government to further increase its prices. Further increase in POL prices
neither would be affordable by the common man nor it would help economy to its cost push
effects on inputs for industry. It is however expected that Turkmenistan-Pakistan Pipeline
project may address this formidable problem, if it is allowed to be completed.
