The Moscow visit by President Pervez Musharraf next
month is likely to produce some significant results especially in
enhancing the economic cooperation between the two countries.
So far the energy sector in Pakistan, having ample
scope of growth, has attracted foreign investment from the US, China and
the Western countries. According to reports, the economic managers in
Pakistan are considering to invite Russian investment in the energy
sector through privatization of the major state-owned oil and gas
organizations in the country. This is certainly a right approach and
would result in a balanced combination of foreign investment from
According to reports, during his visit to Moscow,
President General Pervez Musharraf is likely to discuss the
privatization of government controlled entities in the oil and gas
sector, including OGDC, PPL, SNGPL and SSGCL with Russian authorities
during his upcoming visit to Moscow.
It is learnt that the Ministry of Petroleum and
Natural Resources in its brief prior to the visit has written to the
President's Secretariat to discuss the privatization of the government
controlled entities with the Russian authorities in the President's
upcoming visit to Russia from February 4 at the invitation of President
The discussions with the Russian leaders over
privatization of the oil and gas organization are likely to prove
result-oriented because of Russian cooperation in this field in the past
which would certainly helpful for enhancing economic cooperation between
the two countries.
It may be recalled that cooperation between Pakistan
and former Soviet Union in hydrocarbon, dates back to 1960, when in
1961, the premier exploration and production company OGDCL was
established in collaboration of the two countries.
The Government of Pakistan established Oil and Gas
Development Corporation in 1961 as a statutory corporation to undertake
exploration and development of oil and gas resources.
Now the government has started the privatization
process for sale of 51 percent shares in OGDCL from July 22, 2002 and
Russia will be the best option for the process as its founder and have
the knowledge about the company far better than any other foreign
Besides OGDCL, the privatization of PPL, SNGPL and
SSGCL will also find place in the discussion with Russian authorities.
It is believed that Russian help can be obtained in
joint venture in the exploration of oil and gas as the Russian
geo-scientists in the academic and research organization have thorough
knowledge of Pakistan's geology, hydrocarbon potential and exploration.
Their expertise can be utilized in joint venture with
Pakistan E&P companies in the development of undeveloped oil and gas
fields, where endeavor is necessary to increase the production and
shallow oil and gas fields where deeper potential has not been explored.
There is a lot of scope to establish joint venture in
manufacturing for special alloy steel pipes, drilling stings, drill
collars and high pressure pumps for use in the oil and gas related
The Russian Company OAO Gazprom has already signed a
memorandum of understanding for conducting the pre-feasibility study for
shallow water for the Iran-Pakistan-India Pipeline project and
cooperation in other areas of oil and gas sector.
It certainly gives a sense of satisfaction that
despite a sluggish global economic environment and the risk perception
regarding Pakistan's economy, foreign direct investment in the country
During the financial year 2002 inflows totaled $484.7
million. During the current financial year the foreign investment
inflows are expected to grow as regional risk perception ease and
following the substantial improvement in Pakistan's external sector.
In the last financial year, the major beneficiary
area was the oil and gas sector, followed by power. This pattern is
likely to sustain even during the current year.
The country-wise position of foreign investment
reveals that USA takes the lead, contributing about 67.3 per cent of the
total foreign investment during last financial year. The major three
areas for US investors in Pakistan were oil and gas exploration, trade
In view of ever increasing consumption of the gas in
various segment of the economy especially the power generation and the
transport, the natural gas becomes an attractive area of investment for
An overview of the gas consumption pattern in
Pakistan reveals that during the year 1991 the total gas consumption in
Pakistan was 465,338 million cft. Since 90s consumption continued to
grow as it jumped to 712,351 million cft in 2000, 762,151 million cft in
2001 and 803,507 during the financial year 2002.
The energy policy in the country assigns a much
greater role to the natural gas sector in Pakistan's economy thus making
a focal point from the investors' point of view. With this back ground,
the economic managers are rightly considering that the foreign
investment in the petroleum and natural gas sector through privatization
of the state-owned entities would find greater attention of the foreign
investment purely due to attractive economic returns of their