Feb 11 - 17, 2008

The contribution of Rs. 42 crore to the government revenue every month under GST regime clearly indicates the significance of LPG amidst energy mix of the country.

The importance of LPG as alternative fuel becomes more conspicuous when one looks its role in the transport sector as it caters to the fuel requirement of a huge fleet of auto rickshaws of around 2 lakhs plying on the roads in Pakistan. According to a rough estimate over 35000 rickshaws in Karachi and 45000 in Lahore are moving on LPG hence a huge population is using LPG as a transport fuel besides a large population in hilly areas of Northern Areas heavily relies on LPG as cooking fuel. LPG as a cooking fuel is more desirable especially in view to avert deforestation because in the absence of LPG people, living in countryside, have no option but to cut trees to use wood as a fuel.

In Karachi, LPG is mainly used as a transport fuel yet despite approval by the concerned authorities LPG has yet to be accorded its proper place in the energy sector of the country. Currently some ten refineries and other energy organizations are producing LPG which comes to around 1800 tons a day as against its requirement of around 2000 tons per day; the deficit is met by imports.

The lethargic attitude of the bureaucracy has left this important energy segment into unorganized sector and people sitting in small shot are selling LPG at the risk of their lives and the people living around them.

The government policy which has approved the status of LPG as transport fuel has not been implemented so far as not a single filling station has come up on the ground due to stringent conditions framed by the authorities for establishing proper LPG filling stations. At least a plot of land measuring one thousand square yard is required for setting up an LPG filling station, while it can easily be accommodated in an area of 400-600 square plot. Keeping in view of sky high real estate prices on main highways, the authorities should give a second thought to their condition of the size of plot so that people could invest in this important sector which has the potential to ease ever increasing burden on CNG.


It is interesting to note that the overall consumption of natural gas in the energy mix of the country has been alarmingly raised to the level of 51 percent. Such a high percentage of consumption just in one sector is feared of creating an imbalanced supply side of natural gas going forward. Under the circumstances, the authorities should pay proper attention to other energy sources to reduce the burden on natural gas. Hadi Khan, President of LPG Distributors Association of Pakistan while commenting on the recently witnessed abnormal price hike of LPG in Karachi and Punjab said that actually the total production of LPG by different refineries and other energy organizations was around 1700-1800 tons per day as against the market requirement of 2000 tons a day which escalates to 2200 tons in winter. The shortfall is met through imports. However, when the demand of LPG jumped recently due to chilly weather conditions, the producers either dropped the production level or reduced the supply into market which consequently resulted in a price hike. The LPG prices jumped to Rs72-80 per kg in Karachi, Lahore and Peshawar.

Actually, it is a matter of supply management to ensure price stability in LPG market, Hadi remarked and added that the government offers huge subsidy to oil sector but LPG has been ignored completely. In fact, LPG generates revenue of Rs42 crore per day as GST. A small portion of that revenue can be spared only for three months to keep the price level under control. On the other hand, all the producers should be made responsible to meet the shortfall by importing LPG to ensure sustainable supply.

Currently around 65 marketing companies are operating in LPG sector however of the total only 8 marketing companies have proper allocation of LPG distribution by the producing companies while rest of them are just kite flying. This is a serious matter and every stakeholder should be treated at par and a level playing ground should be ensured to bring market stability in the country.


Production of crude oil in Pakistan estimated at 71000 barrels per day (BPD) registering a 9 percent increase over the previous half of the year.

Informed sources in Oil & Gas circles informed that besides crude oil production, the natural gas output was also edged up from 3.78 billion cubic feet (bcf) per day to 3.89bcf per day.

The joint oil and natural gas production volume in the country, in barrel equivalent (boe), topped-out at 694kbpd in 1HFY08, 3.5% higher than in the first half of financial 2007, sources said.

While taking a look at the performance of leading contributors in oil and gas production, the crude oil production by OGDC during first half of financial year 2008 was estimated at 43.6kbpd - a growth of 9%.

The 3.7kbpd surge was achieved as a result of Mela and Pasakhi NE fields going online complemented by higher production rates at Bobi, Chanda & Kunar in operated and Adhi & Makori in the non-operated sections.

The Natural Gas volumes also depicted 6% growth at 952mmcf/day on account of output resumption from Uch, better levels at Qadirpur & Makori and commissioning of Mela field. In boe terms, OGDC's overall oil and gas production posted an increment of 7% in


POL's, which is also a prominent energy producer, oil volumes was shrunk by 10%YoY to 5.6kbpd in 1HFY08 despite production gains at non-operated Adhi and Makori.

However, after depicting a recovery of 1.0kbpd in the month of November, average oil supply in December was 1.3kbpd lower on MoM. The field has further extended the production losses with oil output falling down below 3.0kbpd mark in first week of January.

PPL's oil production in the first half of the fiscal 2008 was recorded at 4.1kbpd, 1.75kbpd or 76% higher than 1HFY07's 2.3kbpd. The bulk of the first half 2008 output increase was due to additional production from the operated Adhi field following its successful expansion.

In the non-operated section, the commissioning of Mela (26% stake) and higher levels at Makori (28% share) also helped in achieving high production rate in 1HFY08.

The natural gas supply at 985mmcf/day was 3% higher due to better averages at Sehwan, Kandhkot, Adhi, Qadirpur and Mela. 30 wells spudded halfway through, 2 discoveries reported against the full year target of 87 wells (42 exploratory and 45 development), 30 wells were spudded in 1HFY08.

In the comparable period of last year, this total was 28 wells. Of the 30 wells drilled in 1HFY08, 9 were exploration wells and 21 were appraisal or development wells. This shows that the E&Ps were more inclined towards development activities than the fresh exploration. In 1HFY08, discoveries were made on two exploration wells (Missri-01 & Bhitai-1), indicating a 22% success rate. Results from at least four exploration wells are still unknown.