Roundup: Pakistan Wooing Foreign Investment in Oil-gas Sector

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Last updated at: (Beijing Time) Sunday, September 15, 2002

Roundup: Pakistan Wooing Foreign Investment in Oil-gas Sector

Pakistan attracted nearly 1 billion dollars of foreign investment in the oil and gas sector last year and is wooing more multi-national companies to explore its huge untapped resources.

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Pakistan attracted nearly 1 billion dollars of foreign investment in the oil and gas sector last year and is wooing more multi-national companies to explore its huge untapped resources.

Located at the cross roads of Central Asia, Pakistan's resourcepotential is estimated at 200 trillion cubic feet (tcf) of gas and40 billion barrels of oil.

The country made desperate attempts to lure foreign investors who had preferred to stay away since long, mainly owing to law and order situation, weak economy and inconsistencies in government policies.

However, following aggressive policies and a number of liberal incentives by the government of President Pervez Musharraf, the investment opportunities for both local and foreign investors havegreatly improved.

As many as 25 oil companies - including 21 multi-nationals- are operating in Pakistan and presently there are around 100 active licenses under exploration covering an area of about 280,000 square kilometers.

Of the huge resource potential, Pakistan has been able to actually discover 15 percent of the total gas reserves and some 1.5 percent of the total oil assets.

Historically, the country has been depending on imported oil to meet its domestic demand with an annual 7 percent growth in its consumption.

The country is producing 66,000 barrels of oil per day as against the consumption of 359,000 barrels and is compelled to import the rest to meet local requirements.

During the year 2000-2001, the country's oil import bill amounted to 2.8 billion dollars which accounted for about 27 percent of its total exports earning.

The previous fiscal year, ending on June, 2002, however saw a decline in oil import bill to around 1.5 billion dollars, primarily due to falling prices of petroleum products in the international market.

Pakistan has 25.1 tcf of proven gas reserves, and currently produces around 0.8 tcf of natural gas per year, all of which is consumed domestically.

The Country's demand for natural gas is expected to rise substantially in the next few years, with an increase of roughly 50 percent by 2006, according to Pakistan's oil and gas ministry.

Pakistan also plans to make gas the "fuel of choice" for future electric power generation projects. This will necessitate a sharp rise in production of natural gas.

The present government realizing the dire need to bring in foreign investment into this vital sector has been making efforts to woo the multinational companies.

Under Petroleum Exploration Policy 2001, the government has emphasizes on improving, consolidating and continuing earlier policy reforms.

An open gas-pricing policy, cut in income tax rates, abolition of mandatory participation of the Pakistani government in exploration joint ventures and facilitation in repatriation of profits back home are making the country's oil and gas sector more lucrative to the foreign investor.

The new and existing oil companies are now increasing their investment in exploration in the Punjab Plateau and lower Sindh province, which are pregnant with huge oil reserves.

As a result about 100 wells will be drilled during the current year while in the previous year only 35 well could be drilled.

Most of the foreign firms active in Pakistan in the oil exploration and production sector are small independent firms. Chinese oil and gas exploration companies are also fast expanding and accelerating their investments here.

Development of new natural gas fields is proceeding well with the government expecting recently discovered fields to add about 1billion cubic feet per day to Pakistan's natural gas production.

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