There is the prospects of Foreign Investment and the potential of the sector

Apr 03 - 09, 2006

Pakistan's recent robust campaign to attract foreign investment seems promising and I can surely say that it would be gas and oil sector which would be the preference of the investors. The government's plan to set up a mega oil refinery would fascinate scores of foreign investors.

According to official sources, oil and gas sector attracted about $2 billion foreign investment between 2000 and 2003. Pakistan attracted $46 million investment in oil and gas by granting 10 petroleum concession licenses to foreign exploration companies during December 2002 and May 2003. FDI declined to some extent in 2004 but the oil and gas sector attracted 11 per cent higher investment comparatively. A sound indigenous exploration and production will help us save millions of dollars in foreign exchange by replacing imported oil.

OGDCL is volume leader at present and is expected to be the volume leader in future in the capital market. It leads the market with the maximum number of points. Since Iran has been given an ultimatum of 30 days to roll back its uranium enrichment, oil prices will surely soar in the international market and the impact will be seen across the world. Coming back home, it should be known that the market leader, OGDCL, was listed on the Stock Exchanges in October 2003 and share trading started w.e.f. 19th January 2004 on all the three stock exchanges of the country. Pakistan's Oil & Gas sector is a promising sector in terms of present production, potential and foreign & local investment.

The energy sector consists of petroleum products, gas, electricity and coal. According to Economic Survey 2001-2002 during 1990s, average consumption of the petroleum products showed upward trends. On average, 06 percent per annum increase was noticed. The average production of natural gas during July-March 2001-02 was 2521 million cubic feet per day as against 2375 mcfd during the same period previous year showing and increase of 06 percent as against the gas consumption which is increasing by 2.7 percent per annum.








Gas: 200 MMCFD




Gas: 16 MMCFD
Oil: 1,500 bbl/day
LPG: 15 MT/day




Gas: 25 MMCFD
Oil: 2,940 bbl/day
LPG: 125 MT/day




Gas: 30 MMCFD
Oil: 1,700 bbl/day
LPG: 55 MT/day




LPG:25 MT/day




Gas: 10 MMCFD
Oil: 55 bbl/day
Sulphur:80 MT/day
LPG: 9 MT/day




Maintain plateau of Gas production 650 + 100 MMCFD


Major players engaged in exploration and production activities during 2001-02 were OGDCL, PPL, POL OPI, LASMO, PHP, MGCL, BP (PAKISTAN) and TULLOW, and about 900 tons/day LPG was being produced locally during the year.

According to Economic Survey 2002-2003, the average production of natural gas during July-March 2002-03 was 2648 million cubic feet per day. During the period, about 1000 tons/day LPG was being produced locally. Oil and Gas Development Company Limited (OGDCL) is the largest oil exploration and production company in Pakistan. From its inception to March 2003, the OGDCL had drilled 176 exploratory wells and 229 development wells. As on March 2003, the OGDCL was producing 21,613 barrels of oil per day and 731 million cubic feet gas per day.

Economic Survey 2003-2004 reveals that the average production of natural gas during July-March 2003-04 was 3,173 million cubic feet per day. During July-March 2003-04 a total of 34 wells were drilled as against 52 wells drilled in the same period last year thus registering a decline of 35 percent. OGDCL drilled 09 wells compared to 13 wells in the corresponding period last year. The private sector drilled 25 wells as against 39 wells in the same period last year. During the period, about 1000 tons/day LPG was being produced locally. The consumption of gas during July-March 2003-04 increased by 14.9 percent. During 1990-2003, the average consumption of the petroleum products showed an upward trend increasing by 4.1 percent per annum.

Economic Survey 2004-2005 reads that the average production of natural gas during July-March 2004-2005 was 3,681 million cubic feet per day showing an increase of 14.7 percent. During July-March 2004-2005 a total of 34 wells were drilled, including 13 wells in the public sector and 21 in the private sector. During the fiscal year LPG production was around 1500 MT per day.

The crux of the arguments there is the prospects of Foreign Investment and the potential of the sector. There have been times that Pakistan witnessed significant decline in FDI. On the contrary, Oil & Gas sector has always been the point of fascination for the investors. FDI during current fiscal year is expected to touch around $ 3 billion. According to official sources, more than $1 billion have been invested by the major oil companies in the past few years while gas production has also increased to one billion cubic feet.

Pakistan has lot of potential in the area of hydrocarbons and the country has vast potential for investment in the oil and gas sector. The sector is open to investors in order to exploit the full potential. Exploiting the untapped huge hydrocarbon resources of the country through foreign investment would lead it to the path of self-reliance. And attracting foreign investment particularly is the only way out for the country's growing energy appetite to feed accelerating economic growth.

It was in early 60s when our country was assisted by Russia for the development of oil and gas fields. Today Pakistan has all the ingredients to be competitive and has

become one of the lucrative markets for the investors in the sector provided that the security and sustained policies prevail. It must be remembered that the government had provided an attractive package of incentives in the petroleum exploration and production policy 2001. The World Bank in 2004 had rated the oil and gas sector reforms of our country as the best in the region. The investment opportunities in the country according to official sources are in the onshore and offshore exploration, cross border gas pipelines, construction of underground gas storage, coastal refinery and privatization of state owned oil and gas entities.

Pakistan's historical drilling success of one in four is well above world average and has fascinated the foreign investors to the oil & gas sector of Pakistan. Some of the successful examples are: In December, 2001 a seven-member delegation from Chinese National Oil and Gas Exploration and Development Corporation (NOCDEC) visited Pakistan and showed keen interest for the investment. In early 2002, an Egyptian businessman, Shafik Gabr, Chairman and MD of Artoc group for Investment and Development visited Pakistan to explore investment opportunities. He identified three areas including oil and gas for investment. In 2003, the Chinese Daquing Oil Group visited Pakistan to evaluate prospective opportunities for investment in the oil and gas sector. The company was delighted to find tremendous investment opportunities in the construction of gas storage, pipelines, oil refineries, on-shore and off-shore oil and gas exploration. In the same year, Naftogas of Ukraine expressed its interest to invest in the oil and gas sector of Pakistan and also showed interest in supplying equipment and material for the petroleum and gas sector. During the same year, Korea National Oil Corporation (KNOC) expressed its keenness to review the possibility of investment in upstream oil and gas sector. SHV, Dutch multinational company, entered the Pakistani market in 1998. In 2004, the company vowed to invest $100 million in the gas sector of Pakistan. Last year, the chief executives of numerous oil and gas exploration companies such as Tour Dream, Lukoil, BG Tuinthy, Technip, Tempest Resources, Centurion Energy Intil, Red Rock Energy, EMO, Gazprom, MOL Preinieroil, BHP and OMV expressed their desire to invest in Pakistan's oil and gas sector. Last year in September, Kuwaiti Foreign Petroleum Exploration Company and MOL, a Hungarian Company, expressed their interest in investing in the oil and gas sector of Pakistan and the privatization of PPL.

At present British Petroleum Group, the world's second biggest oil company, possesses 47 oil and gas leases and is producing around 11,717 barrels of oil and 235 mmcf of gas per day from its Pakistani fields. Because of BP's commendable contribution towards the promotion of oil and gas industry in Pakistan, the company has been invited to make joint ventures with public sector companies like OGDCL and PPL for oil and gas exploration and production activities in Pakistan.