HARNESSING THE BALOCHISTAN'S PETROLEUM RESOURCES

SYED FAZL-E-HAIDER
Feb 02 - 08, 2009

Pakistan is currently facing grave challenges for the sustainability of energy. The officials have projected a gas shortfall of 10.34 billion cubic feet per day by financial year 2015. The indigenous gas supply has been projected at 2.16 billion cubic feet per day against the current gas supply of 4.3 bcfd. The demand for gas would stand at 12.5 bcfd by 2015. According to the official sources, about 48 percent of thermal power generation is based on furnace oil, out of which about 62 percent was imported at a cost of over $2 billion in 2007-08. 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.

Serious effort is needed on the part of the government to harness the country's petroleum and natural resources to its fullest potential. For example, Balochistan, the country's largest province is rich in oil and gas resources. Geological surveys have reported reserves of billions of cubic feet of gas in the province. In the prevailing energy scenario of the country, the foreign investors may avail the opportunities in energy sector to exploit the province's tremendous indigenous resources. The province produces more than 40 percent of the primary energy of the country in the form of natural gas, coal and electricity.

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.

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. 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 under previous regime. 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.

Deployment of security forces, establishment of cantonments and military operation are not the strategies to create a stable security environment in the province. It is only the political reconciliation and policy of appeasement that can ensure a stable security environment for sustaining a development process and luring foreign investment in the province.

Balochistan is the 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 does not go beyond 1500 mega watts, and the coastal areas get electricity from Iran. On the other hand, Karachi city needs 2500 mega watt of power to continue its industrial, commercial and social life in a normal way.

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 country is currently facing acute gas shortage leading to the closure of many industrial units. The gas reserves are rapidly depleting and the country is still depending on foreign companies for exploration. The country needs modern technology for drilling. According to one estimate, as many as 25 blocks of oil and gas were closed and 16 blocks had been opened with the co-operation of Balochistan government during recent months. The government needs to explore indigenous oil and gas reserves. Talks should be held with the Baloch leaders to expedite exploration activities in the province.