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Monday, July 15, 2024

Government takes credit for “exceptional growth” in Oil and Gas sector

News Analysis |

The Prime Minister Shahid Khaqan Abbasi, on Wednesday, overwhelmingly praised the government for making exceptional growth in the Oil and Gas sector during last five years of the Pakistan Muslim League-Nawaz (PML-N) government.

PM Abbasi while addressing a press conference only a day before the end of PML-N’s tenure made large claims which cannot be shrugged off without paying the heed.

LNG is the cheapest fuel available in the market, and can aptly satisfy the domestic and commercial consumers.  As a result of imported LNG gas, the industry has been revived and the situation has improved drastically, Abbasi said.

LNG indeed proved not only a cheapest alternative fuel but also the best remedy for the growing needs of the country.

It helped the fertilizer sector, restarted the closed CNG stations and most significantly provided uninterrupted gas to gas-based power generation plants.

Read more: Abbasi calls oil and gas sector a great achievement of PMLN…

Abbasi is spot on to declare that fertilizer industry has witnessed a boom. Pakistan exported 600,000 tons of fertilizer last year. It is learned that the RLNG-based factories are willing to continue their production if a favorable environment and sufficient Gas and other inputs are consistently provided.

Government drilled 445 wells in last 5-years, out of these 221 were exploratory well and it discovered gas in 116 wells, which is the 50% success ratio, he asserted.

Oil and Gas exploration witnessed more than 80% increase during the PML-N’s tenure as compared to same period in PPP’s government.

“During first four years of the current government, the companies drilled over 179 exploratory and 194 appraisal wells that resulted in 101 new oil and gas discoveries. While, the previous government drilled 100 exploratory and 172 appraisal/development wells, which made just 39 oil and gas discoveries,” a government official told APP in January.

The Prime Minister said the quality of diesel and petrol imported into the country was one of the worst in the world. It only served the vested interests of selected few, which compromised the environment of the whole country. The PML-N government introduced best quality diesel and petrol in the country at that too at a lower cost.

In order to promote fuel efficiency, the government has introduced marketing of 92 RON Premier Motor Gasoline replacing the existing 87 RON PMG under the regulated environment.

If the next government continues to work efficiently and effectively, Pakistan can overcome its energy problems sooner than later.

Moreover, the mar 95/97 PMG has also been allowed under deregulated environment. Oil Marketing Companies (OMCs) have been allowed to import entire High-Speed Diesel (HSD) as per Euro-II specification (0.05 percent Sulphur content) since the start of 2017.

The government is making efforts to bring improvement in existing refineries as well attracting foreign investment in this sector, claimed PM Abbasi.

PARCO coastal refinery would be completed in three years at a cost of $5 billion. According to Economic Survey of Pakistan 2017-18, Pak Arab Refinery Limited (PARCO) is implementing PARCO Coastal Refinery project at Khalifa Point, near Hub, Balochistan, which is a state of the art refinery having a capacity of 250,000 barrel per day (over 11 Million tons per annum). The estimated cost of the project is over US$ 5 billion. On the directive of the Prime Minister, 1811 acres of land has been allocated for the establishment of PARCO Coastal Refinery.

PARCO is working on a detailed feasibility study of the project which is expected to be completed by end of 2023.

Read more: Natural gas crisis averted: Gas imports start flowing

The government was successful in luring the investors in the sector. It provided maximum incentives, to step up exploration activities in potential areas across the country.

In PML-N’s tenure, more than 10 billion FDI has poured in the country’s petroleum sector, despite low oil prices in international market. Though, companies have been interested in investing in Pakistan. Pakistan is considered a great market for LNG because, unlike other markets, it has an existing, strong gas industry, said Steve Hill, Shell’s global LNG head in an interview with Business Recorder.

Although Pakistan received a total of $1.757 billion dollars of net FDI in the oil and gas sector in the last five years, FDI has dried up in PML-N’s tenure, unlike what Abbasi claimed in his presser.

Pakistan has seen another turnaround. The share of power in oil consumption has significantly declined while the share of transport has increased. This is taking place as the newer installed power plants are moving toward cheaper LNG. According to Economic Survey of Pakistan, the increasing share of transport is mainly due to decline in domestic prices of petrol and higher imports of used cars.

Moreover, oil consumption in power sector has declined from 43% in 2014 to 33% in FY2017.

After adding 900mn cubic feet of gas and 32,000 barrels per day of oil to the “transmission network” over the past four years, the government is s planning to drill around 90 exploratory wells across the next fiscal year.

The holistic of energy sector indicates that government’s decision to start much-delayed and abandoned multi-billion dollar oil refinery projects indicate the seriousness of the PML-N government to resolve the energy crises.

The benefits of an increase in LNG usage are not only limited to the power sector. Other sectors particularly, fertilizers, industries have benefited from this. It was suggested that if Railway switches from diesel-run locomotives to LNG, it could save 40-60% of fuel cost.

Dependence on furnace oil is reduced in power sectors, if Pakistan continues its conversion, it could save up to $2 billion in foreign exchange reserves.

If the next government continues to work efficiently and effectively, Pakistan can overcome its energy problems sooner than later.