The engine for economy: black gold: The Nation

By By Muhammad Nadeem Mirza

submitted 17 hours 45 minutes ago

In recent years, the combination of rising oil consumption and flat oil production in Pakistan has led to rising oil imports from Middle East exporters. In addition, the lack of refining capacity leaves Pakistan heavily dependent on petroleum product imports. Natural gas accounts for the largest share of Pakistan's energy use, amounting to about 50 percent of total energy consumption. Pakistan currently consumes all of its domestic natural gas production, but without higher production Pakistan will need to become a natural gas importer. As a result, Pakistan is exploring several pipeline and LNG import options to meet the expected growth in natural gas demand. Pakistan's electricity demand is rising rapidly. According to Pakistani government estimates, generating capacity needs to grow by 50 percent by 2010 in order to meet expected demand.
Pakistan had proven oil reserves of 300 million barrels as of January 2006. The majority of produced oil comes from proven reserves located in the southern half of the country, with the three largest oil-producing fields located in the Southern Indus Basin. Additional producing fields are located in the Middle and Upper Indus Basins. Since the late 1980s, Pakistan has not experienced many new oil fields coming online. As a result, oil production has remained fairly flat, at around 60,000 barrels per day (bbl/d). During the first eleven months of 2006, Pakistan produced an average of 58,000 bbl/d of crude oil. However, Pakistan has ambitious plans to increase its current output to 100,000 bbl/d by 2010. Due to Pakistan's modest oil production, the country is dependent on oil imports to satisfy domestic oil demand. As of November 2006, Pakistan had consumed approximately 350 thousand barrels of oil and various petroleum products, of which, more than 80 percent was imported. The majority of oil imports come from the Middle East, with Saudi Arabia as the lead importer.
Pakistan's Ministry of Petroleum and Natural Resources regulates the country's oil sector. The Ministry grants oil concessions by open tender and by private negotiation. To encourage oil sector investment, the Ministry has offered various tax and royalty payment incentives to oil companies. Pakistan's three largest national oil companies (NOCs), include the Oil and Gas Development Corporation Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Pakistan State Oil (PSO). All three operate under joint ventures and partnerships with various international oil companies (IOCs) and other domestic firms. Major IOCs operating in Pakistan include BP (UK), Eni (Italy), OMV (Austria), Orient Petroleum Inc. (OPI, Canada), Petronas (Malaysia) and Tullow (Ireland)...

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