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Indigenous oil and gas resources – Balochistan remains a hidden gem

Pakistan imports Liquefied Natural Gas (LNG) to meet the demand of the country’s power sector. The gas indigenously produced stands at 4 billion cubic feet per day (bcfd) against total demand of 6 bcfd. The country has to import 1.2 bcfd LNG to meet the domestic requirements. The rapid depletion of existing hydrocarbon reservoirs in the country indicate that deposits would further deplete by 60 percent by the year 2027. Hence, there is a dire need for accelerating exploration activities in Balochistan’s potential areas on war-footing. Strategically located province is surrounded by the countries like Afghanistan, Iran, and Arabian Gulf states, which are rich in oil and gas reserves. While on one hand it is located in midst of oil and gas reserves, on the other the most important international sea routes pass by the Balochistan coast.

The province has the country’s extensive oil and gas reserves. Out of the country’s estimated 25.1 trillion cubic feet (tcf) of proven gas reserves, 19 trillion are located in Balochistan. According to another estimate, out of the country’s proven oil reserves of 300 million barrels, largely are located in the province. Other sources place its oil reserves at an estimated six trillion barrels of oil reserves both on-shore and off-shore. Balochistan offers great opportunities in oil and gas exploration sector for local and foreign investors. The exploration projects can open up the province converting it into a land of opportunities for foreign investors.

Present government of Prime Minister Imran Khan has made some policy changes to facilitate new companies in the exploration & production sector for getting approval to start drilling activities in potential areas. At present, the country’s total sedimentary area is around 827,268 square kilometers, out of which 320, 741km is under exploration. It has focused on exploration of indigenous oil and gas reserves. No doubt, the exploration option will be more practical and viable in economic sense and it would also be rational to explore the indigenous energy resources than to go for import of gas from other countries.

It has also been observed that gas available from the new discoveries made by foreign companies is much costly than the gas produced by the Pakistan Petroleum Limited (PPL) at Sui in Balochistan. In July 2015, former Balochistan chief minister Dr Abdul Malik Baloch had imposed a ban on new projects of oil and gas exploration in the entire province in order to press the federal government for the devolution of petroleum and natural resources in accordance with the 18th Amendment of the Constitution. In 2017, the Balochistan’s former chief minister Nawab Sanaullah Khan Zehri approved agreement to give Sui Gas Field to PPL on lease for next 10 years period. Under the new agreement, Balochistan will get Rs 74 billion royalty during 10 years in connection with Rs 7.50 billion annual royalty. Under the agreement, PPL would spend Rs 20 billion for exploration of new reservoirs of oil and natural gas.

Sui in Balochistan is still the single largest gas field in Pakistan. PPL, the country’s largest exploration and production company is the operator of Sui gas field in Bugti tribal area. Around 20-25 percent of the total national output of natural gas is being exploited from Balochistan, including 18 percent from Sui gas field. From economic point of view, Sui gas field is of immense importance for the country. It has been 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.

 

Present government is working on a multi-faceted strategy to accelerate oil and gas exploration activities in potential areas besides achieving self-sufficiency in crude oil refining. The officials claim that there are six projects, investment initiatives and proposals are in the pipeline in this regard. If the present government led by Prime Minister Imran Khan seriously takes the initiative of boosting drilling activity in the province, then it will be a game-changer initiative. If Balochistan has proven reserves of oil and gas, then why the exploration, production and drilling activities have so far been too slower in the province? Why does the country still lack a comprehensive program for on-shore and off-shore oil exploration in Balochistan? What have been the snags, hurdles or constraints for tapping the energy resource potential of the province?

Balochistan borders Iran, which is rich in oil and gas resources. Some observers believe that discovery and drilling of oil wells in Balochistan may cause the Iran’s oil to flow towards the province, which is physically located below the level of surface in Iran. Some independent analysts have even claimed that Pakistan is bound for not drilling oil wells in southern Balochistan under a secret deal with Iran, as the neighboring country would lose most of its oil for its flow toward lower landscape.

Oil and gas companies are planning to start work on some exploration blocks, which faced delay due to security issues in different areas of Balochistan to find new deposits.

No doubt, security has been the main issue related to the energy sector development in the province. 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 over the past two decades.

The Marri Petroleum Company Limited (MPCL) plans to start seismic surveys in Zarghon and Block-28, where a major discovery is expected. The OGDCL on basis of satellite images had completed in-house geological mapping of the Kohlu Block, covering an area of 2459.1 square-kilometer in Mari and Bugti tribal areas in the province. The efforts are also underway to perform geological field work and 2D seismic data acquisition in the block pending since 2004, which is expected to complete within a year. Oil and gas exploration in Balochistan should not be limited to Marri-Bugti tribal area but other districts — Sunny Shoran, Kharan, Zarghoon area, Chaghi, Lasbela, Bolan, Makran and coastal regions may be explored. Geological reports confirm huge reservoir of Petroleum and gas in Kalat, Kharan, Kohlu and Lasbela districts in Balochistan.

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