Overview

Pakistan s produces about 60,000 barrels of oil per day which only meets approxima
tely one sixth of the country s current oil requirement. The balance amount is imp
orted at a staggering cost of US$2.5 Billion. In view of the increasing demand a
nd the current decline in production this cost is going to increase substantiall
y over the next couple of years.
The demand for natural gas is exceeding supply due to increased usage in the dom
estic, industrial and power generation sectors. Apart from this, Pakistan does n
ot have the necessary infrastructure to cope with the increasing volumes of impo
rted oil and requires substantial investment to support this infrastructure. The
Privatisation of the units in the oil and gas sector will not only increase the
operational efficiency of these units but also contribute towards new injection
of investment.
Policy
The Petroleum Policy of 1994 assisted in the development of the upstream sector.
The Policy, however, could not arouse sufficient interest to attract interest i
n the downstream sectors, off shore areas and the Baluchistan Basin.
The 1997 Petroleum Policy is based on a review of the 1994 Policy and offers maj
or incentives in the upstream and downstream petroleum sector,, including a pack
age based on production sharing arrangements for offshore areas. The Policy focu
ses on mobilization of greater resources and promotion of private sector investm
ent in the oil and gas sector.
Efforts are being make to exploit the existing energy resources to build a stron
g indigenous exploration and production base. These efforts are directed at achi
eving cost effectiveness, reduction in import dependence, promotion of self-reli
ance through accelerated exploitation of energy resources and minimum environmen
tal degradation.
In addition, a number of far-reaching measures have been taken which include att
racting private foreign investment, creating a qualitatively improved infrastruc
ture in oil and gas industry, development of an efficient and transparent manage
ment, deregulation of downstream petroleum marketing sector and rationalization
of prices and LPG allocation.
A new package for offshore exploration has been prepared for attracting explorat
ion investment in off-shore areas which has so far remained relatively limited.
A separate Holding Company, Gas Regulatory Authority and Petroleum Regulatory Bo
ard are planned to be established for privatization. The privatization of SNGPL
and SSGCL is under process. The import of LPG has been liberalized to promote in
vestment in import of LPG, storage and infrastructure on the basis of commercial
opportunities and risk. This would facilitate those areas of the country, which
are not yet connected with pipeline network.
Statistics
The major sources of commercial energy supplies in the country include oil, gas,
coal, liquefied petroleum gas (LPG), hydel power, thermal power and nuclear pow
er. The quantum of energy supplies from these sources during July-March 1996-97
stood at 124.97 million barrels of oil/petroleum products, 522,768 Mcf of gas, 4
3,605 kWh of electricity and 2,366 thousand tones of coal. Out of the total comm
ercial energy supplies in the country during July-March 1996-97, oil accounted f
or 42.70 percent followed by gas (37.68%), hydel power (14.14%), coal (5.30%) an
d nuclear power (0.18%).
Oil is the largest source of energy supply accounting for 42.70 percent of total
supply during July-March 1996-97. Oil by and large is an important source of en
ergy. However, an increasing proportion of oil requirement is being met from dom
estic production.
Next to oil, natural gas is a major source of energy accounting for 37.68 percen
t of the total energy supply. Apart from being a cheap source of energy for dome
stic consumers, it is a feed stock for chemical fertilizers and a major source o
f energy for thermal power and cement plants.
The country has recoverable gas reserves of 20.814 trillion cubic feet. The aver
age production of gas during July-March, 1996-97 was 1,909 million cubic feet pe
r day against 1,806 million cubic feet per day during July-March 1995-96. Main c
ompanies currently engaged in exploratory and development activities are LASMO,
MGCL, OGDC, OXY, POL, PPL and UTP.
The country has recoverable oil reserves of 209 million barrels. The average oil
production during July-March 1996-97 was 58,784 barrels per day of which 22,154
barrels per day was produced in the northern region and 36,630 barrels per day
in the southern region. The oil production in the northern region declined due t
o natural depletion of oil fields.