Excavating hope

Petroleum Policy 2012 could end Pakistan’s gas troubles

Saying that Dr Asim Hussain has been ‘reasonably’ unsuccessful in solving Pakistan’s energy predicament, throughout his tenure as the Petroleum Minister initially and the now Pakistan government’s Adviser on Petroleum and Natural Resources, would be the biggest understatement since Elephant Man was told that he was “reasonably unattractive”. We’ve had protracted spells of power outages more than doubling power supply duration; gas load shedding has been etched in our national folklore; lackluster CNG policy has seen cars queuing up outside gas stations like metal heads queue up for a Judas Priest concert; pipeline projects and LNG import plans have been shelved owing to political acrimony and most criminally our own resource-rich reservoirs – wherein the solutions to most of the energy problem lie –have been neglected. And while the current ruling party’s riposte to all of this has been to lay the blame on the previous government’s profligacy – which is the ethos of politicians in our neck of the woods – even if one were to juxtapose the performances of the respective governments, it’d be ‘reasonably’ correct to say that it has been a case of ‘anything you can do, I can do worse’. Even so one would also have to admit that with the Petroleum Policy 2012 announcement this week, the government and Dr Asim are staking a ‘reasonable’ claim to redemption.

The Petroleum Policy, the second that the current government has summoned, was completely unexpected – another understatement, for the record. In what is an uncharacteristically bold move, the government has finally earmarked natural gas production as the go-to play, so to speak, and the fulcrum of the policy is production price adjustment which should result in the excavation of much needed supplies of gas and petroleum. The gas price has been raised above the $6 per MMBTU (Million British Thermal Unit) mark for all three exploration zones – Zone I, II and III – from the previous $3.24 per MMBTU, with $7, $8 and $9 per MMBTU for the three offshore zones – shallow, deep and ultra-deep respectively – being the prices on offer, the government’s toiling hard to woo the investors. Doubling the production price of natural gas is an invitation card for international exploration and production companies, for all practical purposes, headlined with “you’re hereby invited to come and drag us out of this mess”. Considering the previous production price on offer and the soaring crude oil prices around the globe, no one in their right state of mind would have considered investing in exploring our reserves – which has exactly been the case in the past. And hopefully that should change, thanks to this latest move by our government.

In addition to catering to the desiccating gas supplies, the excavation of new zones is also extremely pivotal on the oil front. With production from existing fields drying up precipitously, Pakistan’s oil bill could touch the $100bn barrier by 2025 even if the oil price remains around $100 per barrel. And considering political concerns like the Iranian sanctions; the scrambles for the Arctic, Gulf of Mexico, Brazilian offshore; the plunge in Saudi production; the Sudan-South Sudan brawl, et al, if anything that price per barrel would skyrocket further, resulting in Pakistan’s import bill in effect stampeding over the aforesaid barrier. So yes, following that particular crude awakening, it is pretty evident that exploring new zones is the need of the hour.

In the press conference following the policy announcement Dr Asim was pretty loud about the gas troubles, and was adamant that Pakistan would “no longer face any problem of energy shortage”. His plan is to raise the total gas production in the country to 5 bcfd (billion cubic feet per day) from the current 4.2 bcfd, and half a billion of this 0.8 billion jump would be added to the system “shortly”. And after carrying our parching LNG bowl all over the world, it is India of all countries that seems to be on the brink of exporting 200 MMCFD of LNG through Wahgah border as the two neighboring countries continue to enhance trade ties with Islamabad moving towards granting New Delhi the MFN status.

Furthermore, while defending the government’s endeavor of bidding CNG adieu in a gradual phase-out, Dr Asim labeled the burning gas in vehicles as its “worst use” and said that the nation should make the best of every single molecule of energy – the fox, the sour grapes and all that. The fiasco surrounding the CNG sector is one shambolic circus that would forever be a part of this government’s legacy; however, if this latest Petroleum Exploration and Production Policy lives up to any way near its potential it might help soften the CNG blow somewhat.

It is also promising to note that Dr Asim has been generating positive vibes on the pipeline front as well, after letting that façade suffer under international political antagonism. There is a road show being prepared for the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline, which would surely propel the project towards completion, and more crucially the government is still digging in on the IP (Iran-Pakistan) Pipeline front, as Washington’s sanctions on Tehran continue to reverberate.

If we remain steadfast on IP, make advancements on TAPI, enhance LPG import – and trade in general – with India and most importantly encourage companies to explore our reservoirs, there is absolutely no reason why we can’t overcome our energy shortage. And while that ‘if’ is about the size of Mount Damavand, with Petroleum Policy 2012 Dr Asim has indeed dug out hope for the nation.

The writer is a staff member and can be reached at [email protected]