An ambitious plan has been drawn by the Ministry of
Petroleum and Natural Resources to develop the huge gas reserves
discovered by various local and foreign companies in Balochistan and
Sindh. Pakistan has decided to focus on the development of these
reserves by offering more incentives to the exploring companies rather
than going for cheaper imports. The reserves estimated to be more than
30 trillion cubic feet ( enough to meet country's growing requirements
for more than 50 years ) out of which about 3 trillion is already
explored and in final stages of development .
At the same time, however, Pakistan will extend
full cooperation to the proposed pipeline projects from Iran and
Turkmenistan for supply of gas, through Pakistan, to India and other
gas deficit area in the region on commercial lines. Besides other
benefits these projects will provide additional source of income in
foreign exchange to Pakistan as royalty for the passage of pipelines.
In case of any emergency Pakistan can always receive gas supplies
through these pipelines. Besides, during construction phase of the
pipelines, jobs will be provided to hundred of thousands workers.
According to the a statement issued by the
Petroleum Ministry, a high level meeting presided over by the Chief
Executive in Quetta recently approved the long shelved plans to
reactivate oil and gas exploration in this province which is known for
its highly rich oil, gas and mineral resources. The plan includes a
comprehensive package guaranteeing attractive return on investment and
firm arrangements for law and order, protection of life and movement
to the workers of the Multinationals operating over there.
This is definitely a bold initiative by the present
government to revive the oil exploration activity in the province
which had remained suspended in the past several years on the
withdrawal of foreign explorers from the scene who invoked the clause
of "force majeure" in the face serious disturbances which
were usually created by the tribal people living in the adjoining
areas. It is indeed deplorable fact that the past government miserably
failed to tame the situation and consequently the huge reserves of the
otherwise backward province remained untapped. The present government
strategy to offer not only to incentives, facilities and protection to
exploration firms but also to ensure speedy development of the social
sector for the people of the areas, it is hoped, would win over
cooperation of the people for successfully carrying out the
exploration activity.
CAUTIOUS
MOVES
According to the Federal Petroleum Minister, the
existing limitations of the gas transmission system in the country has
stalled progress in the development and commercial utilization of the
discovered gas reserves. He further pointed out that this was one of
the main hurdles underlying the government's cautious moves in the
handling of negotiations with the foreign companies in finalizing
price agreements. In other words, if the gas purchase agreements were
signed with these companies, the government would be honourbound to
pay for the contracted gas off take even if actual transmission does
not commence. The Minister estimated an investment of about 500 to 600
million dollars for the desired expansion of the gas transmission
system in order to induct additional gas supplies into the network.
During his recent visit to Kuwait, the Petroleum
Minister, Usman Aminuddine, found a very favourable response when he
offered to Kuwaiti investors to invest in the profitable projects of
oil and gas transmission pipelines in Pakistan which needed a total
investment of about one and half billion dollars At the same time the
government has offered to the multinational oil and gas companies
already working at various sites in Pakistan to come forward to also
invest in the transmission system with attractive returns. The recent
increase in the prices was directed to offer more profits for the
operating companies. Privatisation of Sui Southern and Sui Southern
distribution system at enhanced rate are steps to achieve the same
objectives. According to the reports the Ministry had recommended 25
per cent annual increase in the prices of gas for the next four years.
The two gas companies are to be put on sale by the
current year. In order to ensure continued rising profitability to
attract the investors the government is intending to fix the tariff
for gas for the next 3 to 4 years. In this way the government is
providing a guaranteed increase in the profitability to the investors
besides providing full protection to the firms engaged in exploration.
Justifying the proposal for enhancing the gas prices the Ministry said
that the important factor which cannot be overlooked is the need to
ensure a fair return to gas explorers keeping in view the
international prices of fuel oil so that the foreign investment flows
into Pakistan's oil and gas sector may be sustained. With the
improvement in the rate of return of gas exploration and marketing as
a result of recent increase and guaranteed enhanced tariff, it is felt
that not only the newly discovered gas reserves would attract capital
investment from foreign companies for making these reserves
commercially operative but also new foreign investment is expected to
show up for laying the pipeline network throughout the country in
order to integrate gas flows from the new reserves with the existing
gas supply network.
