EXPLOITING BALOCHISTAN GAS POTENTIAL TO OVERCOME ENERGY SHORTAGE

SYED FAZL-E-HAIDER
Sep 21 - Oct 04, 2009

Balochistan produces more than 40 percent of the primary energy of the country in the form of natural gas, coal, and electricity. The province is rich in oil and gas resources.

The country's demand for energy, according to one estimate, is expected to rise at the rate of 10-12 per cent annually in the foreseeable future, which means that if this rate of increase continues, demand for energy may well double before 2015. In the prevailing energy scenario of the country, the foreign investors may avail the opportunities in energy sector to exploit the country's tremendous indigenous resources.

Geological surveys have reported reserves of billions of cubic feet of gas in Balochistan. Tremendous gas potential of Balochistan may be tapped by granting maximum exploration licenses to foreign oil and gas exploration companies.

According to a recent report based on the results during first half of Fiscal Year 2005-06, three listed oil and gas exploration and production (E&P) companies OGDCL, PPL and POL collectively produce 74 per cent of oil and 50 per cent of gas in the country. The report stated that during the first six months of FY 2005-06 (July-Dec 2005), the listed E&P sector posted a net income of Rs29 billion versus that of Rs21.7 billion during the similar period last year. It represented a significant growth of 34pc in the bottom line. Amongst the three E&P companies, OGDCL occupies the major share in profit i.e. 70pc, followed by PPL 20pc and POL 10pc during the period.

Net sales of the E&P sector during first half of FY 2005-06 were recorded at Rs64.2billion, higher by 34pc over sales at Rs48.0 billion during the same period in FY 2004-05. With over 36pc contribution to the overall net sales of the E&P sector, combined oil production of E&P companies was up by 7pc to Rs48,000 barrels per day.

Gas has been stated to have remained the major contributor to the top line growth in first six months of FY 2005-06 having around 57 per cent share in net sales. According to the experts, the growth in earnings primarily ensued from higher levels of oil prices on international front coupled with a volume increase in oil and gas production. In 1952, PPL discovered a huge natural gas field at Sui in Bugti tribal area in Balochistan. It was the seventh largest gas field in the world and the biggest in Pakistan at that time. From that day, the natural gas got name and fame as 'Sui gas' all over the country. Commercial exploitation of the field began in 1955. Since then the Sui Field has been meeting a significant amount of the Pakistan's energy requirements.

What is the most discouraging factor from investment point of view is the prevailing security problem in Balochistan. Uch Power Plant in the province was repeatedly attacked with rockets in recent years. It was finally closed down due to law and order problem in the province. In January 2005, the law and order problem at Sui in Dera Bugti district had led to the countrywide gas load-shedding for many days, as the damaged gas plants at Sui were to be repaired. Millions of households faced gas shortages in the country after the main gas plant was hit during clashes between security forces and Bugti tribesmen.

The southern region, along with the northern, was facing a 110 MCF gas shortage daily. SNGPL was facing a daily gas shortage of 480 million cubic feet (MCF), compared to its 1,750 MCF daily production under normal circumstances. The Punjab was facing a shortage of 460 million cubic feet in its daily requirement of 1,650 million cubic feet. Punjab was facing a shortage of 460 million cubic feet in its daily requirement of 1,650 million cubic feet. The SSGC, which supplies around 1150 MCF of gas on a daily basis, was facing a shortfall of 110 MCF of gas. It had asked the industrial units to prepare themselves for a reduced supply.

The option left for thermal powerhouses was to use furnace oil for operation of power generating units due to the gas shortage problem. SSGC had reportedly asked powerhouses at Jamshoro and Kotri to undertake load management on their own, as the normal gas supply could not be ensured due to the Sui crisis.

From economic point of view, Sui gas field is of immense importance for the country. It is the single largest source of energy supply for different industries, power generation, agriculture, commerce, and household use in the country. Gas from Sui is also used for the manufacture of fertilizer and other chemicals. The quantum of natural gas production from Sui gas field is a vital source of huge foreign exchange savings for the country as the same would have been spent on the import of energy had the gas reserves in abundance not been discovered. Unfortunately, the province has been deprived of its due share in terms of royalty and economic benefits.

The government must open up the Balochistan province for exploration and production activities to fully and efficiently exploit its gas potential. The province is strategically located in the region of immense geo-economic and geo-political importance. The E&P projects will open up the land of Balochistan converting it into a land of opportunities for foreign investors. Geographically, it is the same province from where the greater part of the proposed multibillion gas pipelines would have to traverse-either from Iran, Qatar or Turkmenistan.

It is in the supreme national interest that security environment in the province would be ideal for bringing foreign investment in the country. It is undeniable fact that security and economy are interlinked.

Balochistan is the largest and least developed province of Pakistan. It has no sound industrial base; hence, there is no significant consumption of electricity for industrial purpose in the province. The power consumption is largely for domestic purpose. Being the least populous province, Balochistan consumes the least power, as compared to other provinces of the country. According to one estimate, the province's total power needs do not go beyond 1500 mega watts, and the coastal areas get electricity from Iran. On the other hand, Karachi city needs 2500 mega watts of power to continue its industrial, commercial, and social life in a normal way.

The power shortage should be tackled through efficient power management, both under long-term and short-term programs. The QESCO needs to take immediate measures to tackle the load shedding problems in urban and rural areas of the province. It should reduce the transmission losses from the grid and eliminate unscheduled load shedding.