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Discovery of indigenous oil, gas reserves in Balochistan a good turn

Published on 8th Aug, Edition 32, 2016

 

Having abundant gas treasury with good standing in the world Pakistan’s gas reserves are rapidly depleting as the country facing acute gas shortage and hardly meet its industry and domestic needs. Gas load shedding has become a routine in major industrial cities of the country. The country’s demand for energy, according to one estimate, is expected to rise at the rate of 10-12 percent annually in the foreseeable future, which means that if this rate of increase continues, demand for energy may well double in coming years.

Pakistan was the seventh largest gas field in the world and the biggest in Pakistan during 1952 when Pakistan Petroleum Limited (PPL) discovered a huge natural gas field at Sui in Bugti tribal area of Balochistan in 1952. From that day the natural gas got name and fame as ‘Sui gas’ all over the country. It has been observed that gas available from the new discoveries made by foreign companies is much costly than the gas produced by the PPL at Sui. Therefore, 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. The government must explore indigenous oil and gas reserves of Balochistan. Time calls for opening up the resource-rich Balochistan for investments in oil and gas sector. Favor

Huge petroleum and gas

Balochistan is rich in oil and gas resources. Geological reports confirm huge reservoir of Petroleum and gas in Kalat, Kharan, Kohlu and Lasbela districts in Balochistan. Therefore, oil and gas exploration 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.

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. 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 co-operation of Balochistan government during past 10 years.

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 Balochistan. It is the operator of the country’s oldest Sui Gas Field in Bugti tribal area. Around 23 percent of the total national output of natural gas is being exploited from Balochistan, including 18 percent from Sui Gas Field in Bugti tribal area Sui is still the single largest gas field in Pakistan. At present, the Sui Gas Field produces around 800 MMscf of natural gas daily from 87 wells completed during 50 years of production. It is the pioneer gas-producing field. Drilling at Sui well No. 1 commenced on 10th October, 1951 by Burmah Oil Co. (Pakistan Concessions) Ltd. Natural gas was encountered at a depth of around 4000 feet. However, in search of oil, drilling was continued to final depth of 10049 feet.

Concern and resolve

Commercial exploitation of the Sui Gas Field began in 1955. Since then the Sui Field has been meeting a significant amount of the Pakistan’s energy requirements. From economic point of view, Sui Gas Field is of immense importance for the country. It is 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. Unfortunately, the province has been deprived of its due share in terms of royalty and economic benefits.

 

Balochistan has been demanding of the federal government to transfer entire ownership of the PPL to the province on the ground that the provincial energy resource had kept on feeding the country’s energy requirements since independence. The ownership of PPL could become a source of revenue to the cash-strapped province. Some technical and legal issues were involved in the strategic sale of PPL’s majority shareholding. A significant issue was the formal transfer of PPL shares to the Balochistan government. The federal government, however, did not accept the Balochistan’s demand regarding the ownership of PPL.

Present Balochistan government has already announced to lift a ban on all new projects of oil and gas exploration across the province. In July 2015, former Balochistan chief minister Dr Abdul Malik Baloch 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.

Balochistan’s Chief Minister Nawab Sanaullah Khan Zehri has already approved agreement to give Sui Gas Field to PPL on lease for next 10 years period. Under the new agreement, Balochistan will get Rs74 billion royalty during 10 years in connection with Rs7.50 billion annual royalty. Under the agreement, PPL would spend Rs20 billion for exploration of new reservoirs of oil and natural gas.

Law & Order problem

Law and order is the main issue related to the energy sector development in Balochistan. The province is facing fifth insurgency. A military operation was launched to quell the insurgency in December 2005. In January 2005, the law and order problem at Sui in Dera Bugti district had led to the countrywide gas load-shedding for many days, as the damaged gas plants at Sui were to be repaired. Millions of households faced gas shortages in the country after the main gas plant was hit during clashes between security forces and Bugti tribesmen.

The government must endeavor for a political solution to the Balochistan problem. Peace is vital to launch oil and gas exploration projects in the province. Talks should be held with the Baloch leaders to expedite exploration activities in the province. A peaceful Balochistan is important to achieve energy security objective in national arena

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