Accessing fossil fuels in Balochistan
By M. Ziauddin
Pakistanââ¬â¢s oil and gas needs are growing very rapidly. A population growth rate of over two per cent per annum combined with the average annual economic growth rate of over six per cent in recent years has pushed up the annual demand for oil by over one per cent per annum and gas consumption by nearly 11 per cent.
Indigenous production of oil is over 65,000 barrels a day and that of gas is nearly 4000 million cubic feet per day. The balance in the domestic oil reserves is estimated to be around 300 million barrels and that of gas nearly 33 trillion cubic feet. Considering the annual increase in consumption rates of oil and gas under the obtaining economic circumstances and the expected increase in these consumptions in the heightened growth scenario, these reserves are not going to last for much longer.
During the year 2005-06 an investment of nearly $600million is said to have been made in the upstream petroleum sector and as many as 41 wells were drilled in the period. But this is too inadequate considering the looming challenges.
To quote the CEO of Attock Refinery, M. Adil Khattak, total demand for oil which accounts for 31 per cent of the countryââ¬â¢s energy needs, will grow to 32.51 million tons by 2015 and 66.84 million tons by 2030 from 16.8 million tons last year.
The shortfall of all oil products by 2015 is projected at 30.33 million tons, up from 13.18 million tons in 2005. And to cover this shortfall with imports would be prohibitively costly as the world oil prices are likely to remain hovering around $70-75 a barrel for the next few years.
The recent terrorist activities in Saudi Arabia which contributes nearly 18 per cent to the total world supplies and which has the largest world reserves (265.3 billion barrels), the unending mayhem in Iraq which has the second largest reserves (115 billion barrels) and the nuclear ambitions of Iran which has the third largest reserves( 96.4 billion barrels) and has 11.2 per cent share in the world supplies have combined to create heightened uncertainty in the oil market at a time when its demand in both China and the US has peaked to new heights in 30 years on the back of the two countriesââ¬â¢ phenomenal economic growth.
Meanwhile, major oil reserves are said be becoming harder to find and more expensive to exploit. Many of the oil fields outside Opec have dwindled to very low levels needing costly technology to develop.
Oil industry watchers predict that at least over the next five years the oil price would not go any where near $100 a barrel, but they also project that the price would not go lower than $65 a barrel during this period. The world gas price will be influenced by this oil price band. Advanced economies have so far taken the volatility in world oil prices very well, showing very low rates of inflation as they have been using oil less intensively and more efficiently than in the past. But other economies, especially the developing economies are expected to suffer from recessionary bouts as a result of sustained high world oil prices.
China which has the 8th largest reserve (30.6 billion barrels) of oil in the world and India which is a major oil importing country have both gone out in the world and invested heavily in prospecting industry in many countries to cover their future needs.
Pakistan on its part is said to be seeking investments of up to $16 billion for oil-related infrastructure, including refineries, pipelines and storage facilities. Side by side, Pakistan has also been seeking to import gas through pipeline from Qatar, Turkmenistan and Iran.
But while the investment for oil-related infrastructure has remained abysmally low compared to the needs, the gas import plans have so far remained no more than pipe dreams as the main junctions (Afghanistan and Balochistan) on the routes of Turkmenistan-Afghanistan-Pakistan pipeline and that of Iran-Pakistan-India pipeline continue to remain in the grip of violence and lawlessness.
So, in order to import gas from Iran without major disruptions and also to attract major investment for exploring indigenous oil and gas fields Pakistan needs a peaceful Balochistan, a province which is also endowed with rich deposits of oil, gas, coal, copper, silver, gold and other mineral resources. And now it has a modern state of the art seat port as well.
However, ever since independence to date, the centre has kept this province in a state of total neglect, depriving it of even a modicum of social and physical infrastructure and ruled it from the federal capital rather than letting its people rule themselves from Quetta. The resulting deprivation and destitution has injected among the Baloch people an acute sense of alienation.
Their legitimate demands for provincial autonomy and their struggle to get their constitutional rights over their own assets restored were wrongly labelled as rebellion to crush which military campaigns have been mounted against them as many as three times since 1958.
The third and the latest campaign is still on. This has rendered the province completely lawless and not a very attractive destination for foreign investors with some exceptions proving the rule.
The killing of Nawab Akber Khan Bugti last month is likely to add a further element of violence in the life of the province making it much more difficult to attract foreign investment in the oil and gas sector in the province.
So, if not for anything else, at least for the sake of national economy, the federal government should bring about without any further loss of time a qualitative change in its approach to the law and order problem of the Balochistan province.
To start with, it should immediately suspend the Cantonmentisation of the province. This should be followed up immediately by doing away with the concurrent list in the Constitution. And then the process of implementation of the 33 or so recommendations of the parliamentary committee on Balochistan should be taken in hand earnestly.
These recommendations had envisaged a substantial increasing in the prescribed price of gas at Sui from Rs51 per mmbtu to about Rs95 as against Rs240 for the new gas fields in Sindh and Punjab. This is expected to introduce a modicum of equity among the three provinces.
And perhaps for the same purpose the Dilawar Abbas sub-committee had also recommended that net royalty of each province should be estimated by dividing the total collection of gas development surcharge (GDS) plus the total amount of royalty for all the provincial gas fields by gas production of that particular province. At present Punjab and Sind are enjoying lucrative royalties at the cost of Balochistan.
Indeed, the relative prosperity of urban Sindh and of most of Punjab to a large extent is attributed to cheap gas that has been piped to these regions over the last 50 years from Sui gas fields in Dera Bugti.
So, to enable the country to meet a future of dwindling and costly fossil fuels Pakistan needs a peaceful Balochistan, a Balochistan which is empowered to negotiate with foreign investors directly for the exploitation and development of its proven underground wealth and a Balochistan capable of bringing about social reformation on its own without outside interference.
http://www.dawn.com/2006/09/04/ebr14.htm
By M. Ziauddin
Pakistanââ¬â¢s oil and gas needs are growing very rapidly. A population growth rate of over two per cent per annum combined with the average annual economic growth rate of over six per cent in recent years has pushed up the annual demand for oil by over one per cent per annum and gas consumption by nearly 11 per cent.
Indigenous production of oil is over 65,000 barrels a day and that of gas is nearly 4000 million cubic feet per day. The balance in the domestic oil reserves is estimated to be around 300 million barrels and that of gas nearly 33 trillion cubic feet. Considering the annual increase in consumption rates of oil and gas under the obtaining economic circumstances and the expected increase in these consumptions in the heightened growth scenario, these reserves are not going to last for much longer.
During the year 2005-06 an investment of nearly $600million is said to have been made in the upstream petroleum sector and as many as 41 wells were drilled in the period. But this is too inadequate considering the looming challenges.
To quote the CEO of Attock Refinery, M. Adil Khattak, total demand for oil which accounts for 31 per cent of the countryââ¬â¢s energy needs, will grow to 32.51 million tons by 2015 and 66.84 million tons by 2030 from 16.8 million tons last year.
The shortfall of all oil products by 2015 is projected at 30.33 million tons, up from 13.18 million tons in 2005. And to cover this shortfall with imports would be prohibitively costly as the world oil prices are likely to remain hovering around $70-75 a barrel for the next few years.
The recent terrorist activities in Saudi Arabia which contributes nearly 18 per cent to the total world supplies and which has the largest world reserves (265.3 billion barrels), the unending mayhem in Iraq which has the second largest reserves (115 billion barrels) and the nuclear ambitions of Iran which has the third largest reserves( 96.4 billion barrels) and has 11.2 per cent share in the world supplies have combined to create heightened uncertainty in the oil market at a time when its demand in both China and the US has peaked to new heights in 30 years on the back of the two countriesââ¬â¢ phenomenal economic growth.
Meanwhile, major oil reserves are said be becoming harder to find and more expensive to exploit. Many of the oil fields outside Opec have dwindled to very low levels needing costly technology to develop.
Oil industry watchers predict that at least over the next five years the oil price would not go any where near $100 a barrel, but they also project that the price would not go lower than $65 a barrel during this period. The world gas price will be influenced by this oil price band. Advanced economies have so far taken the volatility in world oil prices very well, showing very low rates of inflation as they have been using oil less intensively and more efficiently than in the past. But other economies, especially the developing economies are expected to suffer from recessionary bouts as a result of sustained high world oil prices.
China which has the 8th largest reserve (30.6 billion barrels) of oil in the world and India which is a major oil importing country have both gone out in the world and invested heavily in prospecting industry in many countries to cover their future needs.
Pakistan on its part is said to be seeking investments of up to $16 billion for oil-related infrastructure, including refineries, pipelines and storage facilities. Side by side, Pakistan has also been seeking to import gas through pipeline from Qatar, Turkmenistan and Iran.
But while the investment for oil-related infrastructure has remained abysmally low compared to the needs, the gas import plans have so far remained no more than pipe dreams as the main junctions (Afghanistan and Balochistan) on the routes of Turkmenistan-Afghanistan-Pakistan pipeline and that of Iran-Pakistan-India pipeline continue to remain in the grip of violence and lawlessness.
So, in order to import gas from Iran without major disruptions and also to attract major investment for exploring indigenous oil and gas fields Pakistan needs a peaceful Balochistan, a province which is also endowed with rich deposits of oil, gas, coal, copper, silver, gold and other mineral resources. And now it has a modern state of the art seat port as well.
However, ever since independence to date, the centre has kept this province in a state of total neglect, depriving it of even a modicum of social and physical infrastructure and ruled it from the federal capital rather than letting its people rule themselves from Quetta. The resulting deprivation and destitution has injected among the Baloch people an acute sense of alienation.
Their legitimate demands for provincial autonomy and their struggle to get their constitutional rights over their own assets restored were wrongly labelled as rebellion to crush which military campaigns have been mounted against them as many as three times since 1958.
The third and the latest campaign is still on. This has rendered the province completely lawless and not a very attractive destination for foreign investors with some exceptions proving the rule.
The killing of Nawab Akber Khan Bugti last month is likely to add a further element of violence in the life of the province making it much more difficult to attract foreign investment in the oil and gas sector in the province.
So, if not for anything else, at least for the sake of national economy, the federal government should bring about without any further loss of time a qualitative change in its approach to the law and order problem of the Balochistan province.
To start with, it should immediately suspend the Cantonmentisation of the province. This should be followed up immediately by doing away with the concurrent list in the Constitution. And then the process of implementation of the 33 or so recommendations of the parliamentary committee on Balochistan should be taken in hand earnestly.
These recommendations had envisaged a substantial increasing in the prescribed price of gas at Sui from Rs51 per mmbtu to about Rs95 as against Rs240 for the new gas fields in Sindh and Punjab. This is expected to introduce a modicum of equity among the three provinces.
And perhaps for the same purpose the Dilawar Abbas sub-committee had also recommended that net royalty of each province should be estimated by dividing the total collection of gas development surcharge (GDS) plus the total amount of royalty for all the provincial gas fields by gas production of that particular province. At present Punjab and Sind are enjoying lucrative royalties at the cost of Balochistan.
Indeed, the relative prosperity of urban Sindh and of most of Punjab to a large extent is attributed to cheap gas that has been piped to these regions over the last 50 years from Sui gas fields in Dera Bugti.
So, to enable the country to meet a future of dwindling and costly fossil fuels Pakistan needs a peaceful Balochistan, a Balochistan which is empowered to negotiate with foreign investors directly for the exploitation and development of its proven underground wealth and a Balochistan capable of bringing about social reformation on its own without outside interference.
http://www.dawn.com/2006/09/04/ebr14.htm
