Table of Contents

Introduction......................................................................................................................................2
Natural Gas......................................................................................................................................2
Current status of gas sector..............................................................................................................2
Gas consumption by user sector......................................................................................................3
Government policy focus.................................................................................................................5
Future Projects of oil and gas sector................................................................................................5
Conclusion.......................................................................................................................................7
Recommendations............................................................................................................................8

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Introduction
Pakistan has considerable oil and gas resources that can help to accelerate growth on the
continent if used strategically. As new resources are being discovered progressively, they are not
equally distributed; indeed. Economy of Pakistan is growing steadily. This growth demands
higher energy consumption and consequently exerting high pressure on country’s economy.
Pakistan mainly depends upon oil and gas resources to fulfill energy requirements. Home
resources of Oil are not enough to quench energy thirst of the growing economy. In the result
Pakistan has to import massive quantity of oil and oil-based products from Middle East
countries. As natural gas is playing an important role in power sector, gas reserves are also
becoming energy deficient. Currently in oil upstream and downstream sector there are some local
and international companies are involved and government is trying to establish such policies that
it will be able to bring more international and global investors in this sector but the rapid speed
of change, high degree of uncertainty and ambiguous political situation of the country acquaints
prominent challenges and risk to foreign investment .Purpose of writing this report is to highlight
the present position of petroleum industry in Pakistan and its upcoming anticipations keeping in
view the economical, geological and political conditions of the region.

Natural Gas
The natural gas that is extracted out of the ground is millions and millions of years old. However,
it is not far ago that the techniques to trace and extract the gas available under the ground has
been developed and employed commercially. In Pakistan the natural gas was discovered near Sui
located in Baluchistan in 1952 and commercial exploitation of the field started in 1955. Current
gas reserves of Pakistan are about 20.79 trillion cubic feet. Gas is almost 50% of our primary
energy mix. Current consumption of the natural gas is around 40.74 B cu ft. Sindh produces
63%, Baluchistan 17 %, KPK 7%, Punjab 3% and 7-10% is the LNG imports. The industrial
sector uses natural gas as a fuel for process heating, in combined heat and power systems, and as
a raw material to produce chemicals, fertilizer, and hydrogen. Pakistan is an energy-starved
country. Local energy appetite is expected to grow at Compound Annual Growth rate of 4.5 to
6.0 in the coming decade further aggravating this scarcity. According to the Oil and Gas
Regulatory Authority (Ogra), the supply-demand gap would reach around 8.5 bcfd in 2028-29.
Pakistan like other energy-starved countries will have to work on various alternative energy
resources to overcome this emerging energy shortage. The Government of Pakistan may employ
two-pronged strategy one for improving existing setup and the other for exploring potential
resources and opportunities. Government should take corrective actions to improve and
safeguard the existing gas-supply infrastructure to overcome line-losses, gas theft etc to reduce
Unaccounted for Gas (UFG) loses. Such UFG losses are a burden on the government exchequer
and cause wastage of a precious energy resource. This warrants measures to ensure zero
pilferage/losses (UFG losses).

Current status of gas sector

According to energy year book Pakistan 2012, 16 exploratory and 34 developmental wells were
drilled for oil exploration and the drilling efforts resulted with two discoveries for natural gas
made by OGDCL. There are no imports of oil are in regulation till now, total production and

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consumption of natural gas is 1400 billion cubic feet annually, during the year 2011-2012 the
production of natural gas was 4,032 million cubic feet per day, Last year the daily production
was 4,063 million cubic feet per day. Hence production of natural gas is decreased by 0.007%.

Gas consumption by user sector

Gas production & consumption in Pakistan till 2010 was38.41 billion cu m, there are no imports
and exports are in regulation till now. In natural gas industry the major consumer is power sector
which accounts for 27% of overall consumption, other major consumers are general industry,
fertilizer sector, transport sector and domestic consumer which consume 24%, 14%, 9% and 19%
respectively. A pie chart of natural gas consumptions during the year 2010-2011 is given below
according to the Energy Year Book 2012.

Figure 1 Gas consumer

Sustainable development in oil and gas sector

The world is moving towards energy crisis globally, the reason behind that is the decline in the
availability of economical and cheap oil. The main reason of current energy crisis is the lack of
power generation which is due to shortage of oil & gas resources, and this can be optimized by
properly utilizing our indigenous resources and by adopting the new technology that is being
exploited by the whole world. Pakistan is a land of God gifted resources, if it properly utilizes its
own resources than there is no need of imports for fulfilling its energy requirements. The
transport sector has become the major consumer of natural gas in last ten years due to CNG
driven vehicles that caused a forceful reason for the shortage of natural gas in the fertilizer,
textile and general industries sector. Also increasing demand of electricity forced the economy to
import oil and oil-based products to fulfill its energy needs. By managing our oil & gas resources
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and adopting renewable and sustainable energy technologies we can do sustainable development
in the oil and gas sector of Pakistan. Further on the crisis being faced by Pakistan, their
reasoning, alternate energy resources and the government policy focus are discussed.
Crisis
From about half a Decade Pakistan is suffering from energy crisis. The power crisis has become
unbearable nowadays. Despite of having a large amount of resources Pakistan imports a heavy
amount of hydrocarbon fuels to fulfill its energy needs. As in 2001, the country had excess
power capacity of 4,000 megawatts. But unfortunately, the situation has got worst. According to
a research Pakistan lies in a region from where the belt of high enthalpy geothermal resources
passes. Hence these energy resources can be exploited for the betterment in oil and gas sector
and to resolve the energy crisis which the country is facing. The reason for the deficiency of
energy in Pakistan seems due to lack of accountability, crooked priorities and poor management.
Shortage in oil and gas sector
Currently the oil industry of Pakistan is not facing any type of permanent shortage in public
sector, however the artificial shortage of oil is occasionally caused by some elements temporarily
due to pricing of petroleum products for the sake of profiting and blackmailing. While in the
power sector the situation is changed. As the stock of oil is at critical level so, the power sector is
facing a serious crisis due to the disputes between PSO and WAPDA as discussed above. On the
other hand, despite of having total gas reserves on 27th number in the world, Pakistan is facing
worst shortage of natural gas. The reason behind this shortage is the depleting of old gas fields,
no new exploration and production, highest CNG consumption, mismanagement and poor
rationing of gas. The reserves of Sui and Qadirpur are gas fields are depleting, negligible
exploration and production with respect to demand of natural gas, Pakistan has become world’s
largest country of having most CNG driven vehicles, these all are the factors that collectively
gave birth to the serious gas shortage in the country. Along with managing all these factors
government should have to make decisions and revised policies for the sake of long-term
solution of natural gas in the country.
Nowadays Pakistan is through a bad law and order situation which is the main reason for the
dearth in the development of exploration and production of oil & gas reserves, Also reasonable
pricing of gas, proper rationalizing of gas in different consumer sectors and by adopting
renewable energy technology for the transport sector which is the major consumer of natural gas
we can overcome the gas shortage and crisis which we are facing.
Shale gas reserves
Shale gas or tight gas is actually the natural gas formed from being trapped within shale
formations. Pakistan has a large reservoir of shale gas which is an alternate energy source and
addition to the current natural gas reserves. According to U.S Energy information Administration
assessment Pakistan has the reserves of 51 trillion cubic feet of shale gas. Shale gas was
discovered in Pakistan in about 2008 by an American George Mitchell, since then Pakistan has
failed to explore the shale gas reserves because none of any local or foreign is agreed yet for the

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shale gas exploration. Government is still working for the exploration of shale gas, in this gas
government has formed a policy for the exploration and production of shale gas in Pakistan to
attract local as well as foreign investment. The reason behind no investment is the gas pricing in
Pakistan and the law and order situation on the country. The gas price in Pakistan is lower than
the other petroleum products and fuels also the law and order situation in Pakistan is very poor
which repels the interest of local and foreign investors. The exploration of shale gas will help the
country greatly in producing cheap domestic gas, saving the foreign exchange spent on imports
of hydrocarbon fuels, reducing electricity crisis and in elevating the economy of the country.

Government policy focus

Oil & gas sector is the major part of the Pakistan’s overall energy mix and meets over 79% of the
energy needs. Hence a high priority should be given to this sector. The governments have
followed up consistent policies aimed to promote foreign investments in exploration and
production sector to exploit the indigenous fossil fuel sources of country for the benefit of the
nation. The reason for improvement in government policy focus is to cut down the heavy
imports. Pakistan’s commercial resources for exploitable energy are oil, natural gas, coal and
hydropower. The current annual energy supply is about 65.01 million TOE, and oil & gas sector
meets 78% of these requirements. The remaining requirements are fulfilled by coal, hydropower,
liquefied petroleum gas, nuclear and imported power. Government should provide the policy
package with competitive incentives to attract the foreign investment also government should
provide complete safeguard and ensure the safety of the investors. In order to incentivize the
previous policy government has revised its policy for the enhancement of exploration and
production activities in the country. In the production and exploration policy of 2012 government
has focused the following objectives for the development in oil and gas sector of Pakistan.
 To expedite the exploration and production activities for the sake of being self-dependent
in energy by increasing oil and gas production.
 To improve the direct foreign investment by improving its terms of investments in the
upstream sector.
 To attract the involvement of Pakistani oil and gas companies in the upstream
investments’ opportunities of the country.
 To train the local professionals in exploration and production sector up to international
standards and providing friendly conditions for their retaining in the country.
 To enhance the exploration and production activities in the onshore frontier areas by
offering internationally competitive packages.
 To ensure a perfect management of resources.
 To conduct the exploration of oil and gas resources in a socially, environmentally and
economically sustainable and responsible manner.
 To provide the energy secure by improving the domestic exploration.
 To ensure the security of the investors and providing them a complete a safeguard.

Future Projects of oil and gas sector

UCH-II development project

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The UCH gas field is situated in Baluchistan about 67km in southeast of Dera Bugti. This field
was discovered by Pakistan Petroleum Ltd in 1955, but due to its low BTU content, it was not
developed. The field was reactivated by OGDCL in 1980s. Till now OGDCL has drilled 15 wells
and currently they are supplying 220-225 MMcfd per day to the UCH power plant via a pipeline
of 47 km, which is the first mega lower heating value gas fired power plant of 586MW. After a
detailed study on the UCH gas field, OGDCL has formed a development plan to increase the gas
production from 220 to 380 MMcfd per day. This project contains the drilling of additional 15
development wells, assembling of a gas gathering plant and the installation of dehydration and
hydrogen sulphide (H2S) plant along with gas delivery station. So far about 14 development
wells have been drilled.
JHAL MAGGSI development project
Jhal Magsi is situated in Jhal Magsi district, Baluchistan. This is a joint development project of
OGDCL (56%), GHPL (20%) and POL (24%), and OGDCL is working as an operator. The
project is currently under implementation, in which compression, dehydration H2S removal plant
is required. On the completion of this project expected production is 15 MMcfd by February,
2013.
NUR & BAGLA GAS condensate field
Bagla Field is situated about 150 Km in East of Karachi at Thatta Exploration Block of Sindh
Province. The nearest city from Bagla is Golarchi that is about 28 Km. The Field was discovered
by Phillips Petroleum Exploration Limited in December 1998. On production testing gas /
condensate was discovered in lower Goru Formation. Later on, the Bagla well# 01 was Plug and
Abandoned due to oozing of gas in the nearby area from the well. Drilling of the Bagla # 02 was
started on 7th June, 2008 and completed on 8th Nov, 2008. The well-produced gas / condensate
from lower Goru Formation.
MARU AND RETI gas field
The field is located in District Ghotki in Sindh province. OGDCL is the working interest owner
and operator of Guddu Exploration License (EL). The working interest of various JV partners in
Guddu EL is OGDCL 70%, Spud Energy Petroleum Limited (SEPL) 13.5%, Improve Petroleum
Recovery (IPR) 11.5% and Government Holdings Private Ltd (GHPL) 05%. The discovery of
the field was made in August 2009. Four wells have been drilled. Total reserves of these fields
are 45.5 BCF. In order to appraise the field, the field will be put on Extended Well Testing
(EWT). About 12 MMSCFD untreated gas will be allocated to M/s Engro for their fertilizer plant
at Dahari.

Economic development
Oil and gas sector of a country impacts on a country’s economy in four ways; share in GDP,
share in state revenues, share in total investments and share in total exports. According to a
report publish by World Bank, in Pakistan GDP was worth 174.80 billion U.S dollars in 2010.
The GDP value off Pakistan is roughly 0.29 % equivalent to the world’s economy. Exports of

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Pakistan during last year were 25.35 billion U.S$ and share of petroleum sector is 6.43 billion
dollars.

Figure 2 Share of oil & gas sector in total export sector

Currently imports of Pakistan are 37.57 billion U. S$ out of which 9.936 billion U.S$ spent on
the imports of petroleum products which is a negative impact on the economy of the country.

Figure 3 Share of oil & gas sector in total import sector

Total foreign investments in Pakistan during last year were 1739 million U.S dollars. And the
share of oil & gas sector in the total investments were 605 million US$.

Figure 4 Share of oil & gas sector in total investment

These are the major indicators of the oil and gas sector on the economy of Pakistan. The oil and
gas sector of Pakistan has a significant share in the revenues of the country. Sustainable
development in the sector will aid the country’s economy lift.

Conclusion
Pakistan is a country which is blessed up with the enormous reservoirs of natural resources. But
the country is still surrounded by the various energy problems. There are several reasons behind
the current energy scenario that has been created in last 6-7 years. Pakistan is facing worst
shortage of oil, gas and electricity that directly effect on the country’s economy. The main

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reasons behind this scenario are lack of development with the increasing demands, bad
governance, poor management of current resources, less exploration of new resources, political
controversies, no adoption of new technologies and lack of local professionals. Pakistan has
enough resources of oil and gas to overcome the energy shortage which it is currently facing, the
major reason of shortage in gas sector is improper distribution of gas in to consumer sector. The
sudden rise in the consumption of natural gas in the transport sector affected the gas sector and
resulted to the shortage of gas in the industrial sector and caused economy downfall. And due to
no new exploration and production in oil sector country is facing shortage of oil too. There are
large reserves of coal in the Thar region Baluchistan which are not been exploited yet due to lack
of professionals, political issues and lack of investments. Also, the shale gas reserves are in large
amount but still not exploited yet due to no investments. Khalifa Coastal Refinery project is also
surrounded by the management problems.

Recommendations
The basic need for the sustainable development in the oil and gas sector is better government
policy with competitive incentives for the investors to grab the foreign investments for the
development in the upstream sector. In the gas sector the first priority in the consumers sector
should be given to the fertilizer, textile and general industries sector, as they have significant
share in the country’s economy. While for the transport sector the government should adopt new
technologies such as biodiesel, ethanol fuels, fuel cell technology, solar energy etc.
Being an Agri country government should encourage the planting of biogas units and the use of
biogas for the cooking and heating purposes also the waste to energy technology in the urban
area for the energy production Use of solar energy should be maximized at the grid stations level
to meet the energy demands, as the country has the sound climate for the solar energy
production. Thar coal reserves should be exploited either by the coal gasification technology or
by the coal liquefaction technology. The indigenous resources should be utilized properly for the
sake of power generation. And the resources should be forced to reduce the dependence on
imported crude oil by adopting renewable energy technologies. Local waste management
companies should adopt waste to energy techniques to reduce the burden on the oil and gas
sector.

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