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US-Pakistani oilman spells out measures for making high investment pitch in oil and gas sector

Published on 7th Mar, Edition 10, 2016


Syed Javed Anwar is a US-Pakistani entrepreneur and a successful businessman. He is the founder and CEO of Midland Energy Inc. and Petroplex Energy Inc. Besides oil, he is also in real estate and other businesses. However, all his other businesses are also related to oil one way or the other. Javed Anwar is also an avid philanthropist. He donates in millions of dollars to universities, schools, churches, mosques and community organizations. He describes his philanthropic motto as “We are blessed, let share it.”

Anwar owes his success to his education, crediting it for getting him to where he is today: founder, president and CEO of Midland Energy Inc. and Petroplex Energy Inc.

“I don’t think that I could have been this successful if I had been driving a truck. (Education) opens a lot of doors. You may not become an overnight millionaire, but I think that with education you can have at least a very decent living,” he said.

Because of what education has done for him, Anwar is an avid supporter of providing the best education possible, and generously donate to educational institutions and universities in millions of dollars. He was awarded Outstanding Philanthropist for the 2014 award on National Philanthropy Day by former President George W. Bush. Anwar has also been named Outstanding Businessman and Entrepreneur Honoree for two different occasions.

Recently he was in Pakistan, during which we caught him up for a chit-chat . Here are excerpts of the interview:

What prospects you see of foreign investment in oil and gas sector in Pakistan?

Since my arrival here everyone is saying that there has been marked improvement in law and order situation. I am here and encountered no untoward incident, so it’s all okay for me. Everyone here is taking of improved law and order situation as a result of the ongoing military operation against the terrorists. Definitely, the law and order situation has improved considerably, but there is a need to send the same message and signals to western world and capitals. As oil business is highly capital-incentive and required latest technology, which is in the West, so there is an urgent need to ensure that the message of improved law and order and peace go to Western capitals to attract investment in oil and gas sector.

When someone wants to invest 30 to 35 billion dollars in a country, definitely the first thing he will do is to visit that country and see the prospects. But when we try to persuade investors to visit Pakistan, they feel uneasy due to the law and order situation and the continued negative signals going from here through media.

Recently, Ambassador Jalil Abbas Gilani visited me in Texas and met our employees and urged me to bring them to Pakistan. I told him that they are all westerners and are hesitant to visit Pakistan and if I pressed them the next day they will quit the company. Whenever I talk to my pilots about visiting Pakistan, they frighteningly said what! We are to go to Pakistan. So there are psychological barriers which needed to be broken. The continued negative media coverage and over-blowing of even minor event has built this barrier, which can only be removed through concerted efforts.

What measures you will suggest to be taken by the government to attract foreign investors especially in oil and gas sectors?

The first and foremost thing is improved security situation. As I told oil business is highly capital-incentive and need latest technology, so anyone before investing billions of dollars will want to make it sure that he will get back his investment with return.

But in Pakistan’s case, only improved security will not be enough. You need to publicize it on wide-scale and continue sending positive signals to the western capitals about peace and improved security situation and conducive environment for investment. Media’s role is very crucial in this regard. To make a high investment pitch, we need to change the perception about Pakistan. Media needs to be cautious in covering incidents and it will have to shun over-blowing minor incidents with TV screens flashing breaking news of even minor incident.

When Benazir Bhutto was assassinated, I was here with my children. The way international media like CNN and BBC covered the events following the tragic incident, my children were amazed that there was nothing like that what the media was broadcasting. Murders and other crimes also occur in US too, but media did not blow these up disproportionally.


What role you can play in bringing foreign investment and investors to Pakistan?

Look, investors seek assurances and guarantee that not only his investment will be safe but he will get return on it. Once one of my billionaire friends, who is in oil business, said “Javed I will give you over one billion dollar and you need to go to Pakistan and get a law passed from the Parliament, which ensures that I will not be deprived of my investment in case of regime change with change of policy or on other pretext.” He said that if this happens I will ready to invest billions of dollars there, but no one can hold out assurance about that regarding Pakistan.

Besides assurance regarding return on investment, investors also see success rate. But in Pakistan’s case, there has not been so much exploration and drilling like Saudi Arabia. Though, once Union of Texas and Occidental Petroleum Corporation were here, but they were scared off due to worsening law and order situation. So there are a number of billionaire friends of mine in oil business, who can be persuaded to invest here. But for that there is a need to fix the basics to make a favorable pitch for investment.

How the recent slide in oil prices has impacted oil production companies and what strategy the companies are adopting to stay afloat?

Off course, the continuing decline in oil prices has greatly impacted oil production and explorations companies around the world. If your are earning 10 thousands dollars a month, and suddenly your earning plummet to four thousand dollars, then it hit you hard. Oil business is capital-incentive and risky and millions of dollars has to be incurred on drilling wells.

In Permian Basin, where we operate, vertical drilling of a single well cost some two million dollar while horizontal drilling of a well cost 10 million dollars. So the oil and gas companies are scaling down their drilling and completion activities to stay afloat. But the plummeting oil prices have hit those companies hard who had major loans, as they are finding it hard to continue servicing their loans.

What are the causes of declining oil prices in international market?

Besides others, there are two major reasons of the plummeting oil prices. Before 2000, the US was dependent on imports for over 65 percent of its oil requirements. In 2001, there has been a boom in America’s shale production. This boom was based on new techniques — Slick-water fracking and horizontal drilling. The use of these technologies scaled up US oil production greatly. Before these new technologies, a well was producing hardly 100 barrel per day, but now in some area the production of a well has gone up to 2000 barrel per day. So now the US, which was reliant on imports for 65 percent of its oil needs, is importing only 40 percent of its total oil and there are predictions that by 2020, the US will be exporting oil.

As per estimates, the area of Permian Basin has oil reserves more than that of Saudi Arabia. So when the oil prices were dropping due to over-supply, Russian approached China, offering it to supply directly on discounted price. Saudi Oil Minister Ali Al-Naeemi got a whiff of the Russian offer and countered the move. Russia tried and failed to get OPEC support for a production curb — and is now ramping up its production in the hope of protecting the volume of oil revenues.

In the meantime, Iran and world powers struck a deal over the Iran nuclear program which also contributed to plunge in the oil prices, besides the weak growth data coming from China.

What is your take about the clean energy phenomenon and whether it too contributed to the declining oil prices?

I don’t think that clean energy has any major role in the ongoing phenomenon of declining oil prices. Clean energy is feasible when investors are provided major tax breaks.

Initially the clean energy needs huge investments. In wind or solar energy, the battery which store power, has been a major issue. Within two to three years, it required to be changed, which is very costly, so in near future clean energy is not going to have a major impact on oil prices.

Where you see the oil prices in near future, whether the oil price will continue to dip or rebound?

Look in oil business demand and supply has a major factor to determine the prices. The world demand is 95 billion barrels per day and minor change in the demand and supply will have a major impact on prices. If oil production dips to 94.8, its shortfall and leads to a surge in oil price but when production surges even to 95.5 it leads to drop in oil prices.

The oil market is also sentiment-driven and if Houthis blow up a single Saudi pipeline it will stir bull in the oil market but if peace prevail in Middle East the oil prices will remain low.

The oil market is so sensitive that once Saudi Arabia’s Ali Al-Naeemi told me that he seldom comments or interact with media because it effect oil prices.

Tell us about your family background and journey to the us to become a successful entrepreneur and oil magnate?

After finishing higher secondary school, I moved to the United States in 1971, where I studied Petroleum Engineering at the University of Wyoming. After earning a degree in Petroleum Engineering, I worked with different oil companies in Midland.

In early 80’s when world oil price dropped, I though it is time to take risk and ventured into oil business. In 1984, I left Cabot Petroleum and moved to Midland, Texas and started my own operating company. Subsequently, I formed Midland Energy, Inc., and the following year, Petroplex Energy, Inc. Initially, I had to work hard and would get up at dawn and go out to the field to supervise various operations such as drilling and completing.


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