1. Oil and gas are by far the dominating source of Energy in Pakistan, with a share of around 80% Pakistan is consuming Liquefied National Gaz (LNG), Liquefied Petroleum Gaz (LPG) and Coal. How do you plan to meet the country’s energy demand? And what are your views on the future energy security of Pakistan?
Essentially, we are a predominantly a gas based economy. Oil is our predominant import and our approach is multi-fold; firstly, we are trying to enhance domestic oil and gas production, which is a relatively medium to long-term prospect. Secondly, we have to reduce the cost of doing business. As we speak, there are 34 steps involved to become a player in the oil and gas market. We would like to reduce these steps to the bare minimum and go into the mode of deemed approval so that companies will not have to come to the government for approvals repeatedly. Hopefully by the end of the month of May 2019 we will be able to roll out a plan focusing on this for the cabinet to discuss. We want companies to feel that when they invest in Pakistan there is minimal bureaucracy; we cannot control the weather, we cannot control other aspects of the equation but what we can control is our behavior and that is the government and the regulator.
The objective is to increase the sedentary area of Pakistan so more seismic teams can be deployed and more explorations can be done. We need to give more incentives in our policy so that we can bring in more players and open up the field. All of this plays with the objective of reducing our dependence on imported fuel, which is LNG. We are importing a significant amount of LNG at the moment but LNG is not meeting half of our requirement so we have to reduce that. It is expensive and the supply is unpredictable. We are looking to hire 3 experts in the field to assist the ministry as Saudi Arabia, the UAE and China are showing strong interest in refineries. This government when they came into power gave us four directions; to enhance indigenous oil and gas production, to reduce the circular debt, to improve the governance of utility companies and finally to make the economy competitive.
2. Your ministry has expressed special interest in exploration projects in Baluchistan. What strategies is the government putting in place to increase oil and gas exploration activities in the country?
Balochistan has a lot of potential, there is a block called block 28 that has been a “force majeur” since 1991-1992 and recently Mari Petroleum has deployed their crew for seismic testing. As per my knowledge there are three to four formations in block 28 and it could have up to 20 DCF of gas. If block 28 opens up, we will see a bonanza in Balochistan. This province has many resources such as minerals, copper, gold and barite, it requires a lot of exploration but unfortunately the terrain and some security issues are causing problems. We are setting up a one window setup for the provincial government, the southern command and our companies to work together, block 28 will be worth watching.
3. Your ministry assured foreign companies interested in investing in the gas sector of the country that the government would extend all possible cooperation and facilities to them. What steps are being taken to boost the sector’s investment attractiveness?
These are the companies, which are here and have left the country. We have MOL an Hungarian company, ENI which is Italian, PGNIG a Polish gas company, Exxon Mobil from the US as well as KUFPEC from Kuwait and Al-Haj from the UAE. The ones that left are Tallow from Ireland, OMV from Austria, Premier Oil from the UK and a few others. Each company makes their own business decisions and I can confidently say that the companies that left Pakistan did not leave because of a lack of business. OMV are still a partner in Pakistan Arab Refinery (PARCO).
We have 41 exploration blocks and we decided to auction 10 of them just to see what the response would be. We did not go for a road show or advertisements, most of the players were locals and from what we analyzed, the results were not very encouraging. We took that into consideration and now we plan to advertise the blocks through road shows and other communication means worldwide with a special focus to the US, South Asian and European markets.
In terms of the midstream segment, there is a lot of interest in refineries. PARCO will install the largest oil refinery in Hub. Abu Dhabi National Oil Company (ADNOC), the Saudi’s and the Chinese are all interested in setting up refineries in the country. The Chinese have already put up a LPG plant in Gwadar and another LNG terminal is being set up near its refinery.
Talking about downstream segments such as; oil storages, petrol pumps and oil and gas stations. We will be importing oil for the coming years, as we do not have enough of it. It is an exciting time in the hydrocarbon sector, lots of opportunities are arising.
The government is committed towards increasing exploration, reducing the cost of doing business and creating an enabling environment for local and foreign companies and investors. We are currently working on a new petroleum policy in which we plan to give offshore rates for exploration companies willing to go into insecure or inaccessible regions.
We are trying to make this ministry a one-shop window for companies to come to. When it comes to drilling, we want to simplify the regime of approvals. We are trying to move from a strict regulatory regime to a compliance-based regulation.
4. What is your final message to the readers of USA Today who consider Pakistan as a potential investment destination in the oil and gas sector?
Our message is that where there is no risk there are no returns. This is a sector where international companies have to come and see it for themselves as the situation in the country is not what they read in the newspapers. The reason ENI, Exxon Mobil and Mol are here is because there is potential. There is significant gaz and some condensates in oil in which investments are being made.
We are even working on increasing the incentives further so that they will be able to do good business, have good returns and have a symbiotic relationship with the host country. Our objective is to minimize the interface and the cost of business with the government.