TAPPING THE GAS POTENTIAL OF BALOCHISTAN

SYED FAZL-E-HAIDER
Jan 11 - 17, 20
10

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.

Geological surveys have reported reserves of billions of cubic feet of gas in the province.

The government must open up the 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.

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 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.

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 cooperation of Balochistan government during past two years. 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.

PETROLEUM POLICY 2009

The presence of natural gas is of utmost importance for Balochistan, as it is an important source of income for the provincial government through the gas development surcharge.

Last year, the Economic Coordination Committee (ECC) to attract investment approved Petroleum Exploration and Production Policy 2009, which was forwarded to another committee of Corporate Social Responsibility for resolving all the undecided and contentious issues. Under the Petroleum Exploration and Production Policy 2009, the E&P firms would encourage local employment through imparting training to the local youth and a handsome amount from the profits would be spent for social welfare of the benefit of the local population.

Pakistan Exploration and Production Companies Association (PPEPCA) had asked the former federal government to open its Balochistan province for exploration to overcome a potential energy shortage.

Petroleum Exploration and Production Policy 2007 failed to address the problems faced by the PPEPCA and was not able to attract much needed foreign direct investment in this sector.

Tremendous gas potential of Balochistan may be tapped by granting maximum exploration licenses to foreign oil and gas exploration companies. Last year, the provincial government gave security clearance to 15 licences issued to different exploration and production (E&P) companies out of 25 licences aimed at stepping up work on exploration and production of oil and gas from natural resources of the province.

Provincial chief minister Nawab Aslam Raisani has invited investments in oil and gas exploration in the province and assured full protection to national and foreign investors. The government has issued NOCs to five national and international companies for investments in the oil and gas sector.

The PPL is the country's largest exploration and production company, which has been dominating the arena of oil and gas exploration for many decades in the province. It is the operator of the country's oldest Sui gas field in Bugti tribal area.

SECURITY PROBLEM

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. The Chinese embassy in Pakistan barred its country's services companies from oil and gas exploration and production work in Balochistan for security reasons after the land mine incident of April 2, 2006 in which six security personnel were killed.

A Chinese petroleum firm BGP was awarded $ 1 million contract in 2001 by the government of Pakistan to carry out seismic survey over an area of 178km in Dera Bugti. The company had suspended the survey in Sui due to security reasons. Over a dozen oil and gas exploration blocks had been awarded to over 20 local (both public and private) and international firms in Balochistan over the past 12 years but they could not start operations due to law and order problems in the tribal areas of 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.

Rich in oil and gas resources, Balochistan offers enormous opportunities for foreign investors. The prevailing security environment in Balochistan cannot attract foreign investment in the oil and gas exploration sector and also call into question the guarantees of security for a proposed multi-billion dollar gas pipeline from Iran that would have to run through the province.

The security situation will only improve when the real stakeholders feel a sense of ownership and they would be held directly responsible for the security of the development projects. Baloch nationalist parties resent over the Islamabad's firm control over the way the province's economy is managed. On the other hand, the perception of a rapid economic progress poses a threat to centuries-old feudal status of tribal chiefs under which they have been enjoying power and exploiting the people.

It is also a proven fact that the use of military might has been ineffective in bringing about a political or social change in a society.