Fuel oil imports stalled if the present situation prevails country would be saving $1 billion dollar per year

Jan 12 - 18, 2004

The petroleum sector is gradually reducing its reliance on imports, especially the fuel oil and diesel which are the two major contributors to enhance the POL products to a level of around $3.5 billion a year.

The policy of replacing these two costly components of our total POL products by natural gas and cheaper fuels like coal etc, has however started producing results which is reflected in reducing the fuel oil imports almost to the nil during last three months, it is reliably learnt.

In fact the thermal power generation is the major consumer of fuel oil all and the country has to pay at least $one billion per year on imports of fuel oil. Currently, the country has not imported any amount of fuel oil for the last three months and if this trend prevails, Pakistan would be saving the huge amount it has to spend on import of fuel oil every year.

The emphasis of shifting the power generation area on natural gas has started paying off as the KESC has managed to shift its 70 percent electricity generation towards gas-fired system. WAPDA on the other hand produces about 65 percent of electricity through oil fired system has also coming out of the oil consumption with more emphasis on gas fired system.

On the refinery side, our refineries are gradually increasing their capacity utilization and have touching new height. The capacity utilization of refineries started increasing from 81.2 percent in 2002, 83.3 in 2003, and 97.7 percent in the first quarter of the financial 2003-04 which gives a picture about things in the refining sector in the country.

A substantial increase has also been registered in electricity generation which is mainly attributed to the induction of new capacity in the Ghazi Brotha Hydel power project. This project has a total planned generation capacity of 1450Megawatt (MW) of electricity per annum. The first of five planned 290 MW turbo-generators began commercial operations in August 2003, while another initiated trial production at the same time. Electricity generation is expected to witness further boosts as additional units become operational.

However, growth in production of indigenous crude oil and coal has witnessed a decline in the early part of the current financial year but it has started improving in the second half and there are strong possibilities that more emphasis on hydro power and development of Thal coal project, would greatly help in reducing reliance on imports of POL products significantly in a couple of years.

Currently, the industrial use of coal as fuel is rising in the country, yet most of the requirements are still being met through imports due to inferior quality of domestic coal and absence of coal processing technology. Recently, a team of over 225 Chinese engineers and coal experts had arrived which is busy on the location of Thar coal field to establishing two coal-based power plants of 300 MW each. Under an agreement with Chinese, Chinese Corporation has agreed to provide technical assistance for a coal processing plant which will be using coal of inferior quality for gasification to use it as a fuel for power generation.

The increase in use of natural gas to reduce reliance on oil imports has, however, raised a question to enhance the gas supply and the development of available gas resources to ensure uninterrupted supply to the gas consuming sectors. Although the increase in demand for gas is not alarming, however, to meet the increasing demands in future, the gas sector would have to work at an accelerated pace for the development of the newly discovered gas reservoirs.

Pakistan has 21.6 trillion cubic feet (Tcf) of proven gas reserves, and currently produces 0.7 Tcf 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 (OGDC), as well as Atlantic Richfield, Lasmo Oil, OMV, and BHP. The largest currently productive fields are Sui, with 650 million cubic feet per day (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. 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.

In this respect, a proposal to develop an energy ring from Iran to Bhutan via Pakistan, India and Nepal was of special interest of the participants of the recently concluded SAARC Summit.

It is reliably learnt that business quarters of India, dealing in energy sector, are quite active to convince their government to participant in the pipeline project from Iran. The petroleum minister of Pakistan has, however, made it categorically clear that weather India or any other countries join in the project or not, Pakistan has a firm determination to go for the project.