OIL & GAS

An Industry Review

By SHABBIR H. KAZMI
Apr 03 - 09, 2006

Oil and gas success ratio in Pakistan is high in the world and the Government offers lucrative incentives to the investors, which are comparable with incentives being offered by other countries. The incentives are yielding positive results and the country's petroleum sector has witnessed tremendous growth in last few years. The country has attracted unprecedented investment but the potential is enormous. This is also evident from the fact that out of 26, twenty two foreign petroleum companies are operating in Pakistan.

COMPANIES OPERATING IN OIL & GAS (UPSTREAM)

1

BHP Petroleum (Asia/Pacific) Inc.

2

Lasmo Oil Company Ltd.

3

Hycarbex Inc.

4

Orient Petroleum Inc.,

5

OMV Pakistan Inc.

6

Petronas Carigali (Pakistan) Ltd

7

Pakistan Oilfields Ltd.

8

Premier Exploration Pakistan Limited

9

Tullow Pakistan (Developments) Ltd.

10

Ocean Pakistan Corporation

11

TotalFinaElf Exploration & Production

12

PAIGE Limited (PAIGE).

13

NATIVUS Resources Limited

14

British Gas International Inc.,

15

IPR Transoil Corporation.

16

Mari Gas Company Ltd.

17

Oil & Gas Development Company Ltd.

18

Occidental Petroleum (Pakistan) Inc.

19

Petroleum Exploration (Pvt) Ltd.

20

Polish Oil and Gas Company (POGC).

21

Pakistan Petroleum Ltd.

22

Shell Exploration Offshore

23

MOL Oil & Gas Company B.V.

24

BP Pakistan Exploration & Production

25

Scimitar Hydrocarbons Pakistan Ltd.

26

Total France

COMPANIES OPERATING IN OIL & GAS (DOWNSTREAM)

1

Shell Pakistan Limited

2

Caltex Oil (Pakistan) Limited

3

Pakistan State Oil Company Limited

4

Total PARCO Limited

5

M/s Bosicar Pakistan Limited

6

Attock Petroleum Limited

There exist a lot of potential and opportunities for the prospective investors to invest in the ongoing and upcoming projects in upstream and downstream oil and gas sector. Government has chalked out a 25 year energy plan in order to keep the pace of progress high in the days ahead. Gas sector has become focus because natural gas is being considered the fuel of future in the world due to escalating high oil prices disturbing the economies of the developing countries.

Pakistan is also expected to become the energy hub in the region due to its strategic location and serve as a corridor for the international supply routes of energy to the landlocked Central Asian States for transporting their oil and gas to the world markets.

In order to increase reliability of energy supply and to reduce burden on foreign exchange, the Government is encouraging exploration in the country. During the current financial year a record number of 37 blocks were advertised for competitive bidding, whereas 9 more blocks have been advertised for the next bidding round. Presently, there are 90 Exploration Licences and 120 Development and Production Leases held by various international and local exploration and production (E&P) Companies operating in Pakistan.

OIL REFINERIES

National Refinery Ltd

Pakistan Refinery Ltd

Attock Refinery Ltd

Pak-Arab refinery Ltd (PARCO)

Bosicor Refinery (Only Private Company)

Pakistan's Primary energy supplies for the year 2004-05 amount to 55.5 million tons of oil equivalent (TOE). Pakistan's energy demand far exceeds its indigenous supplies. Oil and gas constitute bulk of primary commercial energy supply mix of Pakistan, contributing 81.6%. Out of this oil contributes 29.4%, gas 50.3% and LPG less than half a percent. The other sources include coal (7.6%). hydro electricity (11.0%) and nuclear electricity (1.2%).

Historically, the country is dependent on oil imports. The crude oil import for the year 2004-05 was about 8.3 million tons. This account for an equivalent to US$ 2,606 million and that of petroleum products import was 5.7 million tons equivalent to US$ 1,998 million. The total annual import bill for the year 2004-05 was 4,604 million US$. Annual oil refining capacity is 12.82 million tones.

Pakistan has an interesting Geo-dynamic history of large and prospective basin (onshore and offshore) with sedimentary area of 827,268 sq. km. So far about 844 million barrels crude oil reserves have been discovered of which 535 million barrels have already been produced. A Prognostic potential of total endowment of hydrocarbons has been estimated as 27 billion barrels of oil and 282 trillion cubic feet of gas. So far more than 620 exploratory wells have been drilled by various national and international exploration and production companies. This has yielded over 177 oil and gas discoveries. Indigenous production of crude oil during the year 2004-05 was 66,079 barrels per day.

Pakistan is among the most gas dependent economies of the world. Natural gas was first discovered in 1952 at Sui in Balochistan province, which proved the most significant and largest gas reservoir. After successful exploration and extraction, it was brought to service in 1955. This major discovery at Sui followed a number of medium and small size gas fields in other parts of the country.

So far about 52 TCF of gas reserves have been discovered of which 19 TCF have already been produced. Natural gas production during 2004-05 was about 3.7 billion cubic feet per day. Pakistan has well developed and integrated infrastructure for transmissions and distribution of natural gas.

In view of large indigenous reserves, Pakistan plans to use coal as an alternative to imported oil. At present coal constitute only 7.6 % of country's primary energy supplies. Total coal resource potential of Pakistan is estimated at around 185 billion tons, out of which about 175 billion tons are located in Thar desert in Sindh province, which is the 5th largest single coal field in the world. The quality/rank of coal ranges from sub-bituminous to lignitic. The Thar coal is lignite-B but it is low in sulphur and ash content. Historically the coal consumption in Pakistan has come down with increase in gas consumption. There is a great scope for large scale utilization of coal in power generation. A power plant of 150 MW capacity using Lakhra coal is in operation in Sindh province.