FACTS SHEET ABOUT ENERGY RESOURCES IN
Proven Oil Reserves (1/1/04E): 288 million barrels.
Oil Production (2003E): 61,769 barrels per day (bbl/d), of
which 60,000 bbl/d was crude oil (Pakistan posted a refinery
loss of 1,231 bbl/d in 2003)
Oil Consumption (2003E): 360,000 bbl/d
Net Oil Imports (2003E): 298,231 bbl/d
Crude Oil Refining Capacity (1/1/04E): 268,975 bbl/d
Natural Gas Reserves (1/1/04E): 26.8 trillion cubic feet (TFC)
Natural Gas Production (2002E): 0.81 TFC
Natural Gas Consumption (2002E): 0.81 TFC
Coal Production (2002E): 3.7 million short tons (Mmst)
Coal Consumption (2002E): 4.8 Mmst
Net Coal Imports (2002E): 1.1 Mmst
Recoverable Coal Reserves (1/1/04E): 2.5 billion short
Electric Generation Capacity (1/1/02E): 18.0 gigawatts
(70% thermal, 28% hydro, 2.5% nuclear)
Electricity Generation (2002E): 68 billion kilowatt hours
Despite having enormous energy resources, Pakistan
still can be described as an energy starved country firstly due to
tribal culture stalling exploration activity in the potential
concession blocs and secondly the lethargic attitude of the
governments which preferred to rely on imports instead of taking pains
for developing the available energy resources within the country.
Consequently, the economy has to bear heavily on
account of costly oil imports which are likely to cost over $4 billion
at the end of the current financial year 2004-05.
Credit goes to the economic decisions and policies
initiated by the present government for revival of economic growth
which has returned to Pakistan despite the military campaign in
neighboring Afghanistan and continuing domestic security concerns and
immature political ambitions of the opposition. International donor
organizations such as the International Monetary Fund (IMF) and the
World Bank warned that Pakistan must maintain the momentum of reforms
but also acknowledge the progress made so far. IMF and World Bank have
agreed to provide substantial amounts of additional credit, totaling
to nearly $10 billion from 2001 through 2004.
Two oil and gas companies — one national and one
foreign — will start undertaking exploration activities in offshore
area of Indus Delta next year.
In this regard, the government has recently granted
an exploration license over bloc No. 2367-4 (Indus Delta-A) to
Government Holdings (Pvt) Limited and simultaneously signed a
Production Sharing Agreement with Oil and Gas Development Company
Limited (OGDCL) for undertaking off-shore exploration activities.
According to the agreement, the total area of the
bloc is 2,499 square km, official sources said. Indus Delta-A bloc is
located in the shallow waters at the offshore edge of Thar platform.
The minimum work commitment in Indus Delta-A bloc
entails undertaking 215.32 work units with an estimated investment of
$3.5 million. Another company, Kuwait Foreign Petroleum Exploration,
Premier-KUFPEC would start drilling in the offshore area in Indus
Delta by mid 2005 with an investment of $20 million (47 percent
partner in joint venture).
A six-member delegation of Premier-KUFPEC headed by
its deputy chairman recently visited Pakistan informed the minister
for petroleum and natural resources to this effect in a meeting.
The visiting delegation discussed matters
pertaining to promotion of Pak-Premier-KUFPEC cooperation in the oil
and gas sector and evinced keen interest to further invest in offshore
exploration activities in Pakistan.
Pakistan, flanked by Iran, Afghanistan, China, and
India, is the size of Texas and Louisiana combined. The Indus and
Balochistan basins cover 80% of Pakistan's total area. The country
also has 230,000 sq km of marine Exclusive Economic Zone. The law
regarding E and P activity was promulgated in 1986, replacing the
previous Petroleum (Production) Rules of 1949. As a result of the new
Petroleum Policy implemented in March 1994 and streamlining of the bid
review and award process, acreage leased including reconnaissance
during 1994 was 355,541 sq km onshore and 120,640 sq km offshore, with
the number of operating groups also a record high of 46. Although
complex and disturbed as a result of collision tectonics, Pakistan's
geology is as fascinating as the surface geomorphology, from the
complex compressional thrust to the relatively simple extensional
rifted, salt related to transform fault associated, the reefs, too,
all impressive traps for petroleum, at times almost textbook examples.
However, domestic oil production at year-end 1994 was about 53,251 b/d
of oil and 1.7 bcfd of gas. Oil and gas have been found in the Potwar/Upper
Indus basin and Lower Indus basin, and mainly gas with one
gas/condensate discovery in the Suleiman/Middle Indus basin. This
article attempts to present brief case history outlines of typical,
significant oil and gas discoveries of Pakistan 1951-94 with respect
to the two main productive basins, their source and reservoir
sequences, in order to determine the anatomy of success in exploration
The Executive Committee of the National Economic
Council (ECNEC) will in its December 7 meeting considered allowing oil
and gas exploration in Balochistan The council will also consider a
proposal by the Petroleum and Natural Resources Ministry wanting
projects of the Oil and Gas Development Company Limited (OGDCL)
exempted from being submitted to the Central Development Working Party
(CDWP) and ECNEC.
Pakistan produced 61,769 barrels per day (bbl/d) of
oil in 2003 (of which 60,000 bbl/d was crude oil), and consumed
360,000 bbl/d of petroleum products. Net oil imports were 308,000
bbl/d in 2003. While there is no prospect for Pakistan to reach
self-sufficiency in oil, the government has encouraged private
(including foreign) firms to develop domestic production capacity. So
far, the domestic oil production centers on the Potwar Plateau in
Punjab and lower Sindh province while the oil resources in the
province of Balochistan were still untapped due to difficult tribal
Oil and Gas Development Corporation Limited (OGDCL),
which is a leading government, owned organization was producing around
22,334 bbl/d. A 5% stake was sold in a public offering in November
2003 for approximately $119 million. OGDCL is Pakistan's
second-largest oil producer after UK-based BP. The government has also
offered a stake of up to 15% of Pakistan Petroleum Limited (PPL), the
largest exploration and production entity in Pakistan.
Currently the government controls 93% of the
company, which owns the Sui fields in Balochistan, as well as
exploration interests in 22 blocs. The government also has a 35% stake
in Pakistan Oilfields Limited (POL).
Though the oil sector reforms in Pakistan are
generally on track, however, the privatization of several firms,
including Pakistan State Oil (PSO), continues to be postponed.
It may be mentioned that government's divestiture
of its 51% stake in PSO to a strategic partner has been planned for
several years but the scheme despite a strong will of the Ministry of
Privatization to transfer it to the private sector, the scheme
continues to linger on probably some vested interest are opposing its
privatization, sources said. PSO holds a 60% domestic market share in
diesel fuel and has more than 3,750 retail outlets. Deregulation of
prices for petroleum products is being pursued in parallel with the
privatization of PSO.
The two most significant foreign oil firms in
Pakistan are BP and Eni. BP operates 43 fields in Pakistan and had
reported average production of 25,877 bbl/d in 2003. Other firms
include BHP Billiton (Australia) OMV (Austria), Petronas (Malaysia)
and Premier Oil (UK).
Pakistan's net oil imports are projected to rise
substantially in coming years as demand growth outpaces increases in
production. Demand for refined petroleum products also greatly exceeds
domestic oil refining capacity, so nearly half of Pakistani imports
are refined products. Pakistan's Pak-Arab Refinery (PARCO) became
operational in late 2000, adding to the country's refining capacity,
and alleviating refined product import dependence. The PARCO Mid
Country Refinery at Mahmood Kot was formally commissioned in 2001 and
has capacity of 100,000 bbl/d of throughput (mostly crude oil from Abu
Dhabi and Light Arabian Crude from Saudi Arabia), supplied to the
plant by pipeline from Karachi.
A small, 30,000 bbl/d refinery operated by private
Bosicor Pakistan Limited (BPL) near Karachi began commercial operation
in November 2003. The plant is supplied with shipments of crude oil
from Qatar. The Bosicor plant will allow Pakistan to become a new
supplier of Naphtha to Far Eastern markets. Naphtha makes up
approximately 9% of the plant's output. The plant produces about
10,800 bbl/d of fuel oil, 6,980 bbl/d of diesel, and 4,350 bbl/d of
kerosene, among other products. PSO has a supply contract to purchase
the totality of the Bosicor refinery's products for the next 10 years.
Another major planned project is the
"Iran-Pak" refinery with a capacity of 130,000 bbl/d seems
to have been shelved. The refinery was to be located in the province
of Balochistan. This project was designed with a 50:50 partnership
between Pakistan's Petroleum Refining and Petrochemical Corporation (PERAC)
and the National Iranian Oil Company (NIOC). However, the project has
failed to reach financial closure, as NIOC's demand for a guaranteed
rate of return is at odds with Pakistan's policy against such
Pakistan has 26.8 trillion cubic feet (TFC) of
proven gas reserves, and currently produces around 0.8 TFC of natural
gas per year, all of which is consumed domestically.
Natural gas producers include Pakistani state-owned
companies Pakistan Petroleum Ltd. (PPL) and Oil and Gas Development
Corporation (OGDCL), as well as BP, Eni, OMV, and BHP. As part of its
energy sector reform program, the government is committed to
privatizing a 15% stake of PPL, the largest gas producer in the
country, capable of producing 770 million cubic feet per day (Mmcfd).
The largest currently productive fields are Sui, by far the largest at
650 Mmcfd, Adhi and Kandkhot (120 Mmcfd), Mari, and Kandanwari.
Pakistan's demand for natural gas is expected to
rise substantially in the next few years, with an increase of roughly
50% by 2006, according to Pakistan's Oil and Gas Ministry. Pakistan
also plans to make gas the "fuel of choice" for future
electric power generation projects, hoping to substitute domestic gas
supplies for imported foreign oil. This will necessitate a sharp rise
in production of natural gas, and also has generated interest in
Pakistan in pipelines to facilitate imports from neighboring
countries. Development of new natural gas fields with the help of
foreign investors is proceeding, with Pakistan's government expecting
recently discovered fields to add about 1 billion cubic feet per day (Bcfd)
to Pakistan's natural gas production. Currently, fields in production
include Sawan at about 366 Mmcfd, Bhit at about 316 Mmcfd, and Zamzama
in Sindh province producing about 248 Mmcfd, but possibly able to
produce 380 Mmcfd following a new gas discovery in January 2004.
The government restated its willingness to permit a
natural gas pipeline linking Iran's massive reserves to Indian markets
across Pakistani territory. Pakistan would earn transit fees for
Iranian gas supplied to India and also would be able to purchase some
gas from the pipeline when and if its own demand was sufficient. While
Iran and Pakistan have shown great interest in the project, India has
been reluctant to move forward as long as political and military
tensions with Pakistan over Kashmir persist. The issue was due to be
discussed at bilateral talks between India and Pakistan in June 2004,
although negotiations are still expected to be protracted and
difficult. Iran is offering India that it will cover 60% of the
construction costs of the pipeline, but India remains wary of
Pakistani access to its energy supply. Indian officials said the plan
could be considered if Pakistan can provide security guarantees for
the $3 billion project. Pakistan could earn about $600 million
annually in transit fees from the pipeline.
Another natural gas import possibility is an
eventual link with the Dolphin Project, a scheme to supply gas from
Qatar's North Dome gas field to the United Arab Emirates and Oman, via
a subsea pipeline from Oman. Even though Pakistan has signed a
preliminary agreement to eventually purchase natural gas from Qatar,
it remains to be seen how the initial stages of the pipeline project
go before a route to Pakistan can be conclusively negotiated.
FUEL OF CHOICE
The power sector has 18 gigawatts (GW) of electric
generating capacity. Thermal plants using oil, natural gas, and coal
account for about 70% of this capacity, with hydroelectricity (hydro)
makes 28% and nuclear plants 2.5%. Pakistan's total power generating
capacity has increased rapidly in recent years, due largely to foreign
investment, leading to a partial alleviation of the power shortages
Pakistan often faces in peak seasons. Rotating blackouts ("load
shedding") are, however, still necessary in some areas.
Transmission losses are about 30%, due to poor quality infrastructure
and a significant amount of power theft. Periodic droughts affect the
availability of hydropower. With much of the Pakistan's rural areas
yet to receive electric power, and less than half of the population
connected to the national grid, significant power demand growth is
expected in the long term, though in the short term, Pakistan has some
excess generation capacity.
The electric power sector in Pakistan is still
primarily state-owned, but a privatization program is reportedly
underway. The main state-owned utilities are the Water and Power
Development Authority (WAPDA), and the Karachi Electricity Supply
Corporation (KESC), which serves only Karachi and surrounding areas.
Together, WAPDA and KESC transmit and distribute all power in Pakistan
— over half to household consumers, about one third to industrial
consumers and the rest to commercial and government consumers. Rates
are determined by the National Electric Power Regulatory Authority (Nepra)
and disputes over adjustments to rates are common within the industry.
For example, Nepra announced in July 2004 that
electricity rates would be lowered for domestic, industrial and
agricultural customers in the three distribution areas of Hyderabad,
Peshawar, and Quetta. The distribution companies affected complained
that due to the lower rates, they will be unable to cover their
operating costs. Nepra has advised the federal government to subsidize
the providers at a cost of around $24 million. WAPDA and KESC too
blame low rates on weak earnings and enormous debts to fuel suppliers.
WAPDA is at the center of a public sector "circular debt"
problem, in which state firms and government ministries have failed to
pay power bills, and WAPDA has failed to meet obligations to them and
to private sector creditors, especially state-owned PSO.
Power theft is a pressing issue in Pakistan. While
it is impossible to precisely measure theft (as opposed to line loss),
it is obvious that it constitutes a sizable proportion of Pakistan's
overall 30% loss rate. The situation was so severe by early 1999 that
the government had to assign army units to look for illegal
connections to transmission lines and rigged meters. Power theft is
just one part of the financial problems for WAPDA, and KESC the two
major utility companies of the country.
The analyst, however, feel that exorbitant
electricity rates unaffordable by the majority of the population were
said to be the major cause for power theft at such a massive scale.
Growth in power generation in recent years has come primarily from new
independent power producers (IPP's), some of which have been funded by
foreign investors, and a few WAPDA hydroelectric dam projects. The two
largest private power plants in Pakistan are the Hub Power Company (HUBCO)
and the Kot Addu power company (KAPCO). HUBCO is owned by a consortium
of International Power (UK), Xenal (Saudi Arabia), and Mitsui
Corporation, and has a 1,300-MW capacity. The Kot Addu plant, with a
1,600-MW capacity, was privatized in 1996 (from WAPDA), and
International Power holds a 36% equity stake, while the government
holds a soon-to-be divested 64% stake. Both of these plants, as well
as a few other small private operators, sell power to the national
grid currently run by WAPDA. By May 2004, International Power cut its
holdings in HUBCO from 26% to 16%, after the plant saw a drop in
profits. This is reportedly part of International Power's overall
global strategy and not a comment on the Pakistani energy sector.
The Ministry of Industries and Production announced
to build coal-fired power-generation plants in export processing zones
and in special industrial states to provide a less expensive source of
energy. Efforts in collaboration with Chinese experts are underway to
exploit the large, untapped coal reserves in Tharkparkar. At present,
coal makes up less than a 5% share in overall energy production. Plans
are also underway to expand Pakistan's hydro capacity — the
government approved the construction of 4 new hydro plants to be built
in the North West Frontier Province by 2005/2006 that would generate
several hundred megawatts of additional power. If the $5.5 billion
Kalabagh project is approved — currently it is being held up because
of environmental impact and downstream economic impact concerns —
the new hydro plant could supply 2,400-3,600 MW of generation
capacity. The Ghazi Barotha hydro plant came online in 2003 at a cost
of $2 billion and a generation capacity of 1,450 MW. Coal currently
plays a relatively minor role in Pakistan's energy mix, but the
discovery of large volumes of low-ash, low-sulfur lignite in the
Tharparkar (Thar) Desert in Sindh province could increase its
importance. Thar reserves are being developed under the jurisdiction
of the provincial Sindh Coal Authority and have enormous economic
potential. The Authority's policy is to develop the reserves primarily
to fuel large electric power plants to be built in tandem with the
coal mines. A feasibility study recently was carried out for the
construction of a coal-fired power plant near the Thar coal mines, and
President Pervez Musharraf has stated that coal should make up more
than the current 1% of electric power generation in Pakistan.
Gas has been declared as the fuel of choice in
Pakistan. It is the economics which has forced the managers to assign
a much greater role to the gas either dry or in liquid form to replace
the costly oil.
Currently, the gas consumption was estimated around
0.95 trillion cubic feet which is bound to take a quantum jump in a
couple of years especially with the major consuming sectors like power
generation and transportation are shifting at a much faster rate over
to gas fired system. It is estimated that demand for gas would be
doubled which is feared to outpace the supply side. Under this given
circumstance, the situation calls for serious steps to go ahead with
the Iran-Pakistan gas pipeline the only option to cover the growing
need of the gas in the country. India another energy starved country
is likely to be the third partner in the cross border pipeline
projects in the backdrop of the positive political developments in the
region in view of the improved bilateral relations. If gas pipeline
project goes ahead according to plans, Pakistan is sure to play a
leading role in the energy sector of the region.
Oil and Gas Development Corporation (OGDC), a state company, handles
oil and gas exploration and development; Water and Power Development
Authority (WAPDA) supplies electricity to most of the country; Karachi
Electric Supply Corporation Limited (KESC) serves the greater Karachi
metropolitan area; Pakistan Atomic Energy Commission (PAEC) operates
one nuclear power plant. Major Foreign Energy Company Involvement: AES,
Atlantic Richfield, British National Power, Coastal Power, Gaz de
France, Total, General Electric, Lasmo Oil (U.K.), Marubeni (Japan),
Exxon Mobil, Monument Oil & Gas, Premier Oil, Royal Dutch Shell,
Xenal (Saudi Arabia).
Major Gas Fields:
Bhit, Dhodak, Kadanwari,
Mari, Prikoh, Qadipur, Sawan, Sui.
Major Oil Fields:
Dhurnal, Fimkasser, Liari, Mazari, Thora.
Major Pipelines: Sui Northern Gas Pipeline; Sui
Southern Gas Pipeline; Pak-Arab Refinery Company (PARCO) petroleum
Major Refineries (Capacity): Pak-Arab Refinery
near Multan (95,000 bbl/d); Attock Refinery in Rawalpindi (35,625
bbl/d), National Refinery in Korangi (62,050 bbl/d), Pakistan Refinery
Ltd. in Karachi (46,300 bbl/d).