Pakistan has over 50 trillion cubic feet of shale gas reserves, according to the US Energy Information Administration (EIA) estimates. It's enough to energize Pakistani homes, businesses, power plants, CNG vehicles, fertilizer plants and factories for 25 years at a rate of 2 trillion cubic feet of consumption per year at half the currently agreed price of imported gas from Iran, an agreement the US strongly opposes. It will also save Pakistanis hundreds of billions of dollars in foreign exchange.
The relevant question here is whether America is willing to offer through its oil and gas companies the necessary investment and the advanced technology to quickly and profitably develop shale gas fields in Pakistan in exchange for abandoning the Iran-Pakistan gas pipeline?
Shale gas revolution began a few years ago when an American named George P. Mitchell defied the skeptics and fought his opponents to extract natural gas from shale rock. The method he and his team used to release the trapped gas, called fracking, has paid off dramatically. In 2000, shale gas represented just 1 percent of American natural gas supplies. Today, it is over 30 percent and rising.
Up until 2009, the US was the largest importer of Qatari LNG. However, the discovery of development of shale gas has caused a glut in the US. The Qatari LNG imports are no longer needed and the gas prices have plummeted in the United States. Qatari oil minister was quoted by Bloomberg as saying that 60 percent of Qatari LNG exports “moved to the east” in 2009.
Increased production of gas from shale in the US has created a huge new supply, pushing down gas prices from $13/BTU (million British thermal units) four years ago to just $2/BTU today, even as the price of oil has more than doubled. By contrast, the Iran pipeline gas formula links the gas price to oil prices. It means that Pakistan will have to pay $12.30/BTU at oil price of $100/barrel, and a whopping $20/BTU for gas if oil returns to its 2008 peak of $150/barrel.
To encourage investment in developing domestic shale gas, Pakistan has approved a new exploration policy with improved incentives as compared with its 2009 policy, a petroleum ministry official said recently. Pakistan Petroleum is now inviting fresh bids to auction licenses to explore and develop several blocks in Dera Ismail Khan (KPK), Badin (Sind), Naushero Firoz (Sind) and Jungshahi (Sind), according to Oil Voice.
Under the new policy, exploration companies will be offered 40-50% higher prices for the extracted gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.
Even with the higher prices for the tight gas offered to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.50/Btu for the gas compared with $12.30/Btu for gas imports, according to a report by Platts.
Pakistan should ask the Obama administration to help fund and develop shale gas in exchange for abandoning the Iran-Pakistan gas pipeline. It will be a historic win-win for both nations, as historic as the US aid to Pakistan for Green Revolution in 1960s. Pakistanis will get relief from the severe energy crisis which affects almost everyone in the country. The US energy companies will create thousands of American jobs and make a huge profit in the process with the potential bonus of largely neutralizing the strong anti-American sentiments in the country.
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US Dept of Energy Report on Shale Gas
Pakistan's Twin Energy Crises
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US Department of Energy Data
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CO2 Emissions, Birth, Death Rates By Country
China Signs Power Plant Deals in Pakistan
Pakistan Pursues Hydroelectric Projects
Pakistan Energy Industry Overview
Water Scarcity in Pakistan
Energy from Thorium
Comparing US and Pakistani Tax Evasion
Zardari Corruption Probe
Pakistan's Oil and Gas Report 2010
Circular Electricity Debt Problem
International CNG Vehicles Association
Rare Earths at Reko Diq?
Lessons From IPP Experience in Pakistan
Correlation Between Human Development and Energy Consumption
BMI Energy Forecast Pakistan
But shale uses up a lot of water and Pakistan is a water stressed country.
Pakistan one of most ‘water stressed’ countries in world
The Pakistan water quality crisis
Mayraj: "But shale uses up a lot of water and Pakistan is a water stressed country."
Shale gas extraction uses a lot less water than other forms of energy production and the water can be reused in producing more gas.
Here's a comparison:
One MMBtu, or 1 million British thermal units, a standard measurement for the energy content of fuels, was produced from these energy sources using the following amounts of water:
Deep shale natural gas 0.60-5.80 gallons
Nuclear (uranium ready to use in a power plant) 8-14 gallons
Conventional oil 8-20 gallons
Synfuel-coal gasification 11-26 gallons
Coal (ready to use in a power plant) 13-32 gallons
Oil shale 22-56 gallons
Tar sands/oil sands 27-68 gallons
Fuel ethanol from corn 2,510-29,100 gallons
Biodiesel from soy 14,000-75,000 gallons
Here's an Economic Times report on India's plans to explore shale gas:
India will launch its first-ever bid round for exploration of shale gas by December 2013, Oil Minister S Jaipal Reddy said today.
"We are pursuing the development of shale gas in the country. We have undertaken the mapping of shale gas resources and are working to put in place a regulatory regime for licensing round in shale gas, by December 2013," he said.
Six basins, namely Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and Indo Gangetic basins, have been identified that may have shale gas potential.
The country has, so far, only explored and produced conventional oil and gas as well as unconventional sources such as coal bed methane (CBM).
Shale gas ---- gas trapped in sedimentary rocks below the earth's surface ---- is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs.
These unconventional deposits have raised estimates for US gas reserves from 30 years to 100 years at current usage rates. Shale gas deposits were not considered worth tapping before Houston billionaire George P Mitchell pioneered new extraction techniques in the 1990s.
India aims to put in place a policy framework for exploitation of shale gas in a year's time.
Several basins in India are known to hold shale gas resources. Primarily, the focus is on three basins -- Cambay (in Gujarat), Assam-Arakan (in the North-East) and Gondwana (in central India).
India has signed a cooperation agreement with the US Geological Survey for knowledge-sharing in the area of shale gas.
"We are also harnessing coal bed methane: so far, we have held four licence rounds, and commercial production has commenced at Raniganj in West Bengal," Reddy added.
Makes no f--- sense, does it?
It will take at least 10 years before shale gas becomes available even in the US from its North Dakota Balken shale gas fields. Meanwhile, Pakistanis will be in darkness without electrical power.
Shams: "It will take at least 10 years before shale gas becomes available even in the US from its North Dakota Balken shale gas fields. Meanwhile, Pakistanis will be in darkness without electrical power."
Within the last few years, the US shale gas contribution has gone from 1% to over 30% of total natural gas produced in America. The same can be accomplished in Pakistan if US agrees to support development of shale gas in Pakistan in exchange for dropping Iran pipeline. And it'll be a lot cheaper and also reduce dependence on foreign sources.
If the Iran-Pakistan pipeline ever gets funded, it'll take at least two years to deliver gas to Pakistan while risking crippling US sanctions on Pakistan as well.
Production in Northeastern Pennsylvania recently passed 2 Bcf/d, up from just 0.4 Bcf/d at the start of 2010. In Southwestern Pennsylvania, production is over 0.8 Bcf/d, more than three times the level at the beginning of 2010.
In West Virginia, production has grown over 40% since January 2010 and recently surpassed 1 Bcf/d.
"requirements for new retorting methods will be 1 to 3 barrels of water per barrel of
"Municipal and other water requirements related to
population growth associated with industry
development will require an additional 58 million
gallons per day. :
Mayraj: "requirements for new retorting methods will be 1 to 3 barrels of water per barrel of
That's for shale oil, not for shale gas.
Here's the comparison again:
One MMBtu, or 1 million British thermal units, a standard measurement for the energy content of fuels, was produced from these energy sources using the following amounts of water:
Deep shale natural gas 0.60-5.80 gallons
Oil shale 22-56 gallons
Tar sands/oil sands 27-68 gallons
The point in my email was that the N. Dakota shale gas will take 10 years to develop --- that is how long it takes a shale gas project to come online. What are the chances that Sindh shale gas could take lesser time?
Shams: "The point in my email was that the N. Dakota shale gas will take 10 years to develop --- that is how long it takes a shale gas project to come online..."
Conditions in North Dakota are very different than in Sindh.
Here's Bloomberg on the subject:
Energy companies exploring North Dakota’s Bakken shale formation for oil need more field crews amid a labor shortage that left hundreds of wells awaiting hydraulic fracturing, a state official said.
The number of wells awaiting hydraulic fracturing, or fracking, is “holding constant” at about 300 above normal after mild weather during the fourth quarter allowed drillers to accelerate work, said Lynn Helms, the state’s mineral resources director.
Fracking is an intensive drilling technique that involves forcing millions of gallons of water, chemicals and sand underground to smash fissures in oil- or natural gas-soaked rock.
“This indicates that fracturing services are now keeping up with drilling activity, but the industry needs to add more crews to catch up,” Helms said in an e-mail today.
North Dakota surpassed OPEC member Ecuador as a crude producer in November when output jumped 42 percent from a year earlier to an average of 510,000 barrels a day, the state said on Jan. 10.
Helms said new drilling rigs will need to be built to meet expanding North Dakota demand because 95 percent of the equipment in the region capable of drilling 20,000 feet (6,100 meters) underground is booked. There were 202 rigs operating in the state today, close to the record high of 204 recorded on Nov. 19, Helms said.
But why would US help us? We keep to be defying them evdrytime. Hafeez Sayeed has got blood of 6 americans on his hands. world knows the biggest of terrorists are hiding in pakistan and we are very well aware of them just like OBL. . we have to stop supporting like of murderers of taseer.
Anon: "But why would US help us?"
Each nation does what it must for its own interest to serve its needs. US and Pakistan are no different.
US needs Pakistan's help in Afghanistan and to isolate Iran. American petroleum companies need to make profits for their shareholders, and America needs to create jobs for its people.
Shale gas? You mean fracking? That's causing earthquakes and poisoning drinking water in US?
Mayraj: "Shale gas? You mean fracking? That's causing earthquakes and poisoning drinking water in US?"
All energy production involves environmental risks which need to be controlled through regulations and enforcement. The upside for shale gas is that it burns a lot cleaner than oil and coal.
Here's an excerpt of a paper on fracking:
The rapid development of shale gas resources in the past few years has already dramatically affected U.S. energy markets—lowering energy prices and carbon dioxide emissions—and could offer an affordable source of low-carbon energy to reduce dependence on coal and oil.1 However, the development of shale gas has been linked to a range of local environmental problems, generating a public backlash that threatens to bring production to a halt in some regions. While hydraulic fracturing in particular has been the focus of much controversy, our analysis indicates that the most significant environmental risks associated with the development of shale gas are
similar to those associated with conventional onshore gas, including gas migration and groundwater contamination due to faulty well construction, blowouts, and above-ground leaks and spill of waste water and chemicals used during drilling and hydraulic fracturing.
Many technologies and best practices that can minimize the risks associated with shale gas development are already being used by some companies, and more are being developed. The natural gas industry should work with government agencies, environmental organizations, and local communities to develop innovative technologies and practices that can reduce the environmental risks and impacts associated with shale gas development. Stronger, fully-enforced government regulations are needed in many states to provide sufficient protection to the environment as shale gas development increases. In addition, continued study and improved communication of the environmental risks associated with both individual wells and large scale shale gas development are essential for society to make well-informed decisions about its energy future.
I don't think regulations and enforcement is Pakistan's strong suit. It maybe okay of people do not live nearby.
The US is being lax.
A friend in NYC told me about his friend in upstate NY who was getting his drinking water poisoned because of fracking nearby.
Mayraj: "I don't think regulations and enforcement is Pakistan's strong suit."
I agree. But are you suggesting that no risk is worth taking? I hope you realize that Pakistan is in a deep dark hole in terms of its energy requirements. It has to dig itself out of it.
No risk is worth taking. They may need to relocate people.
Te de hole will be not just Pakistan's problem since oil production is on decline?
Mayraj: "Te de hole will be not just Pakistan's problem since oil production is on decline?"
Shale oil and gas production has been rapidly growing, not declining in North America. In fact, there are labor shortages in oil & gas regions in US & Canada.
For us to date coal and hydroelectricity are the cheapest forms of energy available.One just has to use the huge reservoirs available.Until we get ourselves able to build more nuclear reactors.
Anon: "For us to date coal and hydroelectricity are the cheapest forms of energy available.One just has to use the huge reservoirs available.Until we get ourselves able to build more nuclear reactors."
Hydro is seasonal. Coal is the cheapest but it's hard to get financing for it because of environmental concerns.
You need cheap gas to have reliable power generation capacity....domestic Pakistani shale gas at about $4-6 per million BTU can do it....the Iranians want $11-12 per mBTU and Qataris are demanding $18 per mBTU for LNG. Oil is closer to $20 per mBTU.
Gas can be relied upon for a lot of applications ranging from power generation to powering CNG vehicles and used as feedstock for fertilizer production.
Pakistan needs to pursue hydrocarbons and renewables for its growing energy needs.
Unlike domestic shale in Pakistan, Iran pipeline option is expensive and Iranian gas requires a huge foreign exchange component.
Americans are the pioneers in the field of shale gas extraction and can help with technical knowhow and US companies can invest to develop it on an accelerated schedule as they are doing in North America....much faster than Iran-Pak pipeline if it ever gets funded in the face of US opposition.
The reserves are in baluchistan which we all know is not going to be a part of pakistan for too long, so technically the pakistanis(read punjabis) cannot benefit from these reserves.
Anon: "The reserves are in baluchistan which..."
No, the reserves are in Sindh.
Anon: "baluchistan which we all know is not going to be a part of pakistan for too long.."
Here's a Reuters' report on Pakistan's recent fuel imports:
Pakistan bought more than 450,000 tonnes of fuel oil in March, its highest level this year, led by higher imports of high-sulphur grade fuel, official data showed on Thursday.
Total fuel oil imports, used for power generation, climbed 70,328 tonnes to 460,688 tonnes, up around 18 percent, figures from the Oil Companies Advisory Committee showed.
High-sulphur fuel oil (HSFO) volumes rose by 132,492 tonnes at 392,499 tonnes, while low-sulphur fuel oil (LSFO) fell 62,164 tonnes to 68,189 tonnes.
The rise was in line with expectations, as Pakistan imported only about 390,000 tonnes last month, out of the term volume of 890,000 tonnes state-owned company Pakistan State Oil (PSO) purchased for delivery between February and March.
PSO has also sought similar second quarter volumes, but has refrained from buying expensive low-sulphur fuel oil.
The country is looking to increase its hydropower capacity through a recently approved $1 billion World Bank loan in an effort to reduce its reliance on fuel oil imports.
The bank said $840 million of the loan will be used to boost capacity at the Tarbela hydro power project, northwest of Islamabad, by 1,410 megawatts.
Here's a PakTribune story on Russian offer to build Pak segment of Pak-Iran gas pipeline:
Amid severe sanctions on Iran by US and Western countries, Russia has come forward to bail out Pakistan to complete the much-touted Iran-Pakistan gas pipeline and has agreed to fully provide both technical and financial help.
Russia, which had earlier gifted to Pakistan the OGDCL and Pakistan Steel Mills, has now promised to help construct the IP gas line at a time when the consortium, headed by the Industrial and Commercial Bank of China (ICBC), has refused to provide financial advisory services for the gas pipeline project mainly because of US opposition to the project.
In the recent talks, held in Moscow, Russia has given a go ahead signal to Pakistan for completing the project under a government-to-government arrangement. The Russian company Gazprom will arrange finances and construct the pipeline, including the completion of engineering and design of the project.
However, the Russian company is seeking the setting aside of the Public Procurement Regulatory Authority (PPRA)ís rules to complete the mega project for which international bidding is a must as per the PPRA.
"The demands of Russia will be placed in the next ECC meeting, seeking the approval of the demands so that the projects construction could take place as soon as possible," said an official. However, the Ministry of Petroleum and Natural Resources will also seek the approval of the ECC in a cautious move for permission to allow arranging funds for the project from its own resources through infrastructure development.
In case the projectís commissioning gets later than the deadline of December 31, 2004, Pakistan will have to pay $1 million every day to Iran as penalty. "Once the engineering, procurement and construction (EPC) contract is given to the Russian company by putting aside the rules of PPRA, the Russian company will start completing the pipeline of 800km inside Pakistan," the official said.
Here are some details of Pakistan segment of proposed Iran-Pak gas pipeline as published in Dawn:
Here the reported cost of the pipeline is $700m for 900km of the 56-inch-diameter pipeline. Perhaps this figure is wrong but we need to get the full details from our Iranian friends and work out what we can do including the possibility that we acquire the required pipe from the Iranian Ahwaz Rolling Mill, which presumably provided the pipe for the Iranian IGAT 7.
Of the other pipelines the one I have studied most closely is the Dolphin Project’s construction of the 48-inch-diameter pipeline connecting over 244km from the gas-receiving plant in Taweelah to the Fujairah power and desalination plant.
This successfully completed project was awarded to Stroytransgaz — a Russian company — in 2008 at $418m or roughly $ 1.73m per kilometre. At that time, steel prices were at an all-time high and Dolphin or Stroytransgaz contracted to buy 120,000 tons of pipe from Mannesman in Germany for more than $200m. Since then, steel prices have halved.
According to the Steelonthenet.com website billet prices that were above $1,000 a ton in 2008 now stand at just about $500.
One assumes therefore that the cost of material would be about half of what had to be paid in 2008. Were we building a 48-inch-diameter pipeline we would have needed to use by Dolphin standard some 400,000 tons of pipe but since ours is a 42-inch-diameter pipeline the requirement would be reduced to about 320,000 tons and would cost, even if we went to the expensive Mannesman source, about $300m. (I have seen a news item that our interstate pipeline company has invited expressions of interest for the supply of 335,000 tons of pipe which is roughly in line with my calculation).
Compressor stations will be needed and I have not been able to determine how many will be needed and what they will cost but a perusal of the literature would suggest that for the amount of gas involved we may need three or four compressor stations with a total 100,000 horsepower. These should not in my view cost more than $50-75m.
As regard other costs an American study suggests that in America in 2007 pipeline costs were roughly divided between labour (35 per cent), material (35 per cent) and the balance as miscellaneous of which right-of-way costs were about eight to nine per cent.
They projected that material costs would decline but labour and right-of-way and other miscellaneous costs would rise.
Material costs have, as stated, declined. This, however, is the only factor, which is common to Pakistan and the US. The other costs are much lower in Pakistan. The Balochistan government has granted right of way for free, and the cost of the skilled welder in Pakistan is about 10-15 per cent of the cost of welders in the US.
Our design and other miscellaneous expenses have to be much more modest since the current designed path of the pipeline, running parallel to the coastal highway will create few environmental concerns and require culverts or other major tasks other than the crossing of the Indus.
Perhaps this is wrong and experts should indicate what their evaluation is but to my mind in Pakistan the cost of material will be about 50 per cent of the total cost of our pipeline. That means our 780km pipeline should cost about $700m to $800m and no more. It is an amount that the government can easily cough up from its own resources if it diverts the gas surcharge towards this end, and the problems of finding foreign financing need not arise.
Turning now to the question of paying for the pipe that I presume we would import from Iran if Ahwaz Rolling mills has the capacity, I believe we have to see greater use of imagination and innovation. To start with, we must work out a mechanism whereby our payment is made in rupees used by the Iranians to pay for what they import from Pakistan. What can this be?...
Here's an Express Tribune report on planned US AID changes:
In a bid to maximize benefits of civilian aid, Pakistan and the United States have agreed to reconsider the economic assistance programme as dividends of the $7.5 billion five-year package remain largely invisible.
Under the $7.5 billion aid package, Pakistan has so far received only $680 million in over two years. The US has also delayed approval of spending plan for Kerry-Lugar-financed projects due to strains in bilateral relations.
Shaikh, who along with his team is leaving for the US to participate in meetings of the World Bank and International Monetary Fund (IMF), will also take up the issue of coalition support fund and spending plan with US authorities, the official said.
He said the US was interested in giving assistance for economic reforms and devolution programme, besides education, health and energy.
According to the finance ministry, Rajiv Shah highlighted priority areas for funding, achievements and expectations through USAID. The key areas were energy, agriculture, education and health.
“We are steadily moving forward and we have identified what we need and what USAID can provide,” said Dr Waqar Masood, Secretary of Economic Affairs Division during the meeting.
The ministry said Shah underscored the importance of institutional stability and the need for public-private partnership in the agricultural sector.
He pointed out that they had prepared long, medium and short-term plans. In the long term, focus will be on institutional stability while in the medium term social sector will be provided support.
Shah emphasised that “despite challenges the broader bilateral relationship has faced, civilian assistance has remained steady and USAID looks forward to continuing to work together to support mutual objectives in the future.”
According to the US embassy statement, the two sides discussed the important role of economic assistance in bilateral relationship and how US civilian assistance could create jobs and raise incomes of Pakistanis.
It claimed that the US has disbursed more than $2.6 billion in assistance to Pakistan since October 2009. The assistance also includes disbursements made before the Kerry-Lugar package. Much of this assistance has focused on developing the energy sector and increasing economic opportunity for the Pakistanis.
In the energy sector, the US has collaborated with Pakistan to finance the Tarbela Dam extension project and other major energy projects which have expanded electricity-generation capacity by over 400 megawatts, bringing electricity to over six million more people.
By the end of 2013, US assistance will be adding another 900 megawatts to the national grid, providing electricity to over 14 million people, according to the statement.
Here's a Nation newspaper report on US AID chief Shah's visit to Pakistan:
Since the passage of the Kerry-Lugar-Berman legislation in October 2009, the US government has disbursed more than $2.6 billion in civilian assistance, including approximately $830 million in emergency humanitarian assistance. The US civilian assistance funds are spent in five priority sectors: energy, economic growth including agriculture, stabilisation of the border regions, education, and health.
Notably, the people of the United States supported the construction of 210 kilometres of road in FATA and Khyber Pakhtunkhwa, provided clean drinking water to half of the population of the FATA, funded the world’s largest Fulbright exchange program, and sponsored initiatives promoting private sector growth and civil society development in Pakistan.
The Administrator communicated the United States government’s continued desire to engage with Pakistan, focusing on areas of mutual interest and working through issues with trust, respect, and clarity of purpose.
In his meeting with Finance Minister Dr Abdul Hafeez Sheikh, he discussed the important role economic assistance brings to the bilateral relationship, and how US civilian assistance can create jobs and raise incomes for more Pakistanis. He said that United States has disbursed more than $2.6 billion in assistance to Pakistan since October 2009. Much of this assistance has focused on building Pakistan’s energy sector and increasing economic opportunity for Pakistanis. In the energy sector, the United States has collaborated with the Pakistani government to fund work on the Tarbela Dam and other major energy projects which have expanded Pakistan’s electricity-generation capacity by over 400 megawatts, bringing electricity to over six million Pakistanis. By the end of 2013, US assistance will have added another 900 megawatts to the national grid, providing electricity to over 14 million Pakistanis. On economic growth, the United States has trained nearly 70,000 women entrepreneurs in basic finance.
Shah also emphasised that despite challenges the broader bilateral relationship has faced, civilian assistance has remained steady and USAID looks forward to continuing to work together to support mutual objectives in the future.
For more than six decades, the US Government has helped Pakistan develop its economy by supporting the development of its water, power, transportation, and communications infrastructure and by facilitating the establishment of Pakistan’s university system. U.S.-supported universities include IBA, LUMS, Jinnah Post-Graduate Medical Center, and many others.
In the 1960s and 1970s, the United States facilitated the Green Revolution in Pakistan, enabling the country to meet its people’s food needs. The United States also funded construction of several major power plants and dams, such as Tarbela and Mangla.
Unites States-sponsored health programs also helped eradicate malaria in the country. To this day, the United States continues to support Pakistan with extensive programs in the education, health care, economic growth, stabilisation, and energy sectors. Guests of the inauguration ceremony included representatives of the Government of Pakistan, the Parliament, civil society, implementing partners, and the media.
Meanwhile, Dr Rajiv Shah, Administrator for the United States Agency for International Development (USAID), concluded a two-day visit to Pakistan Friday during which he expressed the strong US commitment to building and improving ties with Pakistan through civilian assistance and development support.
Here's a Daily Times report on IFI holdings of Pakistani shares:
Foreigners remained aggressive in Pakistan’s oil and gas sector as they continued to own more than 500 million shares ($950 million) in Oil and Gas Development Company (OGDC) and approximately 120 million shares ($250 million) of Pakistan Petroleum Ltd (PPL), which represent 83 percent and 45 percent of free float of OGDC and PPL, respectively. This is primarily due to higher oil prices and decent volumetric growth. Similarly, their shareholding in Pakistan State Oil (PSO) and Pakistan Oilfields (POL) is expected to remain almost the same. Thus out of $2.7 billion worth of stocks that foreigners hold (as of March to December 2011), approximately 50 percent of the foreign shareholding is only concentrated in oil sector, including which OGDC alone contributes 35 percent.
Interestingly, foreigners which own every third Pakistani share of free-float, have been net buyers of $11 million so far in CY2012 primarily due to record inflows in regional markets amid improved risk appetite and better global economic data. Last year due to depressed global markets, foreign participants offloaded their positions in Pakistan liquidating $123 million net in 2011 contrary to net buying of $526 million in 2010. However, thanks to continued interest in Pakistan market, foreigners now hold shares valuing $2.7 billion as of March 30, 2012 (28 percent of free float). Their peak holding was $5.1 billion (27 percent of free float) in April 2008 and lowest was $1 billion (17 percent of free float) in March 2009.
Estimated holdings of foreigners in Pakistan key stocks are OGDC $950 million, MCB $250 million, PPL $250 million, UBL $135 million, Lucky Cement $135 million, FFC $125 million, Unilever $100 million, POL $75 million, Hubco $65 million, NBP $50 million, Engro $35 million, Nestle $35 million, PSO $25 million and DGK Cement $20 million.
Here are excepts of an interview of Elliot Theorist Mark Galasiewski who's bullish on Pakistan:
To answer your question, there are various ways to make long-term investment decisions. For example, Warren Buffett has shown that picking individual stocks can provide good returns over time. But it's a very labor-intensive and time-consuming process, to research companies thoroughly enough to have the kind of conviction that he does. And his “buy and hold” strategy means that he suffers significant drawdowns in his portfolio at times -- like during the 2007-2009 crash.
Elliott wave analysis gives you the opportunity to make long-term bets with a similar conviction -- but with a fraction of the elbow grease. Instead of pouring over hundreds of quarterly reports and legal documents, you look for Elliott wave patterns in the charts of market indexes. Those patterns reflect investors' collective bias, bullish or bearish. (I won't go into details of why this is so; our Club EWI has tons of free reports explaining the mechanics of the Elliott Wave Principle.)
So, knowing what part of the Elliott wave pattern your market is in, you know how the pattern should progress from there, ideally. And that gives you a probabilistic forecast for the trend. It doesn't work 100% of the time (what does), but our subscribers remember more than one successful forecast we've made using Elliott waves.
For example, on March 23, 2009 -- at the time when almost no one felt bullish -- we issued a special report to our subscribers forecasting a multi-year bull market in Indian stocks. Two weeks later, we identified three more markets in the region -- Pakistan, Sri Lanka, and Indonesia -- that we believed were also likely to enjoy an "Indian Ocean Renaissance."
India, Pakistan, Sri Lanka, Indonesia have all since generated some of the best returns among global stock markets. Without knowledge of the Elliott Wave Principle, it would have been difficult to forecast the boom -- especially given the dismal news events at the time. Do you remember the headlines in early 2009?
The world was engulfed by the global financial crisis, and most people believed the worst was still ahead. The currencies of India, Pakistan, Sri Lanka, and Indonesia had collapsed. Pakistan and India were on the brink of conflict over the Mumbai terrorist attacks of late 2008. A civil war was still raging in Sri Lanka. Who would turn bullish on stock under those "fundamental" conditions? We did, and only because Elliott wave patterns in the price charts of those four markets told us to "buy."
And by the way, the terrible conditions in India, Pakistan and Sri Lanka mostly reversed along with the market rally over the next year.
The Wave Principle is how the market works. Financial markets are non-rational and counter-intuitive. Investing according to conventional assumptions eventually leads to financial ruin, since the market too often does the opposite of what most people expect.
Even thinking contrarily is insufficient, because sometimes it’s necessary to run with the herd. But Elliott wave analysis helps you to determine which psychological stance is most appropriate at any given time. Often, the news at the time would be suggesting you do the opposite.
The shale gas boom in the US has led to a big drop in its carbon emissions, as power generators switch from coal to cheap gas, reports Financial Times:
According to the International Energy Agency, US energy-related emissions of carbon dioxide, the main greenhouse gas, fell by 450m tonnes over the past five years – the largest drop among all countries surveyed.
Fatih Birol, IEA chief economist, attributed the fall to improvements in fuel efficiency in the transport sector and a “major shift” from coal to gas in the power sector. “This is a success story based on a combination of policy and technology – policy driving greater efficiency and technology making shale gas production viable,” Mr Birol told the Financial Times.
Shale gas has transformed the US energy landscape, with surging production pushing gas prices down to 10-year lows and heralding an industrial renaissance. But it is also the subject of a heated environmental debate, with critics alleging that the production process can pollute groundwater.
Gas is fast becoming the new fuel of choice for the US power sector: in the past 12 months, coal generation has slumped by 19 per cent while gas generation has increased by 38 per cent, according to US Department of Energy figures. A gas-fired plant produces half the CO2 emissions of a coal-fired one.
Overall, however, the IEA said 31.6 gigatonnes of CO2 were released into the atmosphere last year, mainly through the burning of fossil fuels – one gigatonne more than in 2010 and much higher than the average annual increase of 0.6 GT between 2006 and 2010. “The impact of this increase is going to be catastrophic,” said John Sauven, executive director of Greenpeace. “We’ve really got to act now, with a real sense of urgency – which up till now has been completely lacking.”
The increase will make it harder to keep global temperatures from rising more than 2 degrees Celsius above pre-industrial levels – which scientists believe is the threshold for potentially “dangerous climate change”.
Here's a Daily Times report on US aid to Pakistan:
United States Agency for International Development (USAID) disbursed to Pakistan over $2.6 billion in economic, energy, health, education and infrastructure projects under Kerry-Lugar-Berman (KLB) Bill.
“The main emphasis of USAID assistance was on energy production, economic growth, agriculture improvement, education, health and infrastructure projects in the country,” USAID Acting Country Director Karen Freeman told newsmen Friday after function at National Institute of Health here.
“US wants prosperous, secure, stable Pakistan with improvement in all basic needs of life available to people at grassroots level. All USAID funded projects are on track,” she said adding besides producing 400 megawatts (MW) through new projects, assistance is being provided for improving existing energy projects.
She said US government through USAID provided assistance to help strengthen energy sector, enhance economic and educational opportunities available to Pakistanis, improve health care services and meet critical infrastructure needs in remote mountain areas. It also provided substantial relief, recovery assistance, such as when floods devastated the country in year 2010.
Earlier, addressing certificate distribution ceremony of disease control and prevention program, she said outbreak of infection diseases, malaria, tuberculosis, hepatitis threaten well being of entire society. Doctors training will improve their skill to face this challenge. Strong disease surveillance, analysis, control systems are imperative so that infectious diseases are stopped.
Freeman said 31 Pakistani medical officials completed four week training from intensive US funded training program in basic epidemiology designed to strengthen detection, surveillance, analysis of infectious disease at district, provincial level. Program seeks to improve public health, disease control by building capacity in epidemiology, public health surveillance and response, public health laboratories, information systems for disease surveillance. USAID provided $6.78 million for this program since year 2006.
Since inception USAID health program trained 11,000 health care providers, provided 126 ambulances, upgraded 89 community healthcare facilities. In 2010 USAID helped restore 150 schools, trained over 600 teachers in Malakand. USAID offered training in finance to 19,000 women business owners in Punjab, Sindh provinces in 2010. As part of flood relief efforts USAID established 190 mobile health clinics, helped provide safe drinking water to over 1.5 million people daily.
Here's an FT piece on the negative impact of power sector in Pakistan:
...Munir, born and educated in Lahore, makes his case in the latest issue of the Economic & Political Weekly of India, to be published on Saturday.
“The 1994 privatisation of the energy sector offered investors generous returns and created pricey overcapacity,” he told beyondbrics. “This created an expensive legacy which is the real problem of today’s energy crisis.”
Unless that problem is dealt with, he sees no light at the end of the energy tunnel.
He says Pakistan’s government, helped by the World Bank, “sweetened” its energy privatisation with attractive conditions, fearing it wouldn’t be able to attract investors otherwise. It guaranteed a 12 to 15 per cent annual return (indexed in dollars, not rupees), gave tax breaks and paid interest on private funding – more expensive for the government than providing the funding itself. ”The deal was too good to be true for investors,” Munir says.
The government gave those guarantees during an economic boom it assumed would continue. That turned out not to be the case.
Munir says the model turned out to be badly constructed in terms of creating value for the government and people of Pakistan. Even in an environment of economic growth and efficient energy generation, it would have been hard for the government to finance the plan. But since both have been absent, it became nearly impossible to pay for privatised energy.
What else went wrong?
Most private investors chose to build oil-powered plants because of their low construction costs and short lead times. This backfired as the oil price has trebled since the 1990s. Variable costs, and therefore prices to consumers, are at unsustainable levels. “No wonder many consumers can’t afford to pay their bills,” Munir says.
To make things worse, the government neglected to step on the brakes when its generous conditions attracked too many investors. Assuming economic growth would continue, it allowed too much capacity to be built and guaranteed the same return on that extra capacity, whether it was used or not.
But as growth stalled, the government could no longer meet its commitments. So operators have begun shutting down power plants, killing the lights across Pakistan – which is now enduring daily power outages in spite of having excess generating capacity of almost 35 per cent.
Munir says the government should develop new power plants using cheaper fuels, and that this shouldn’t be a problem in a country with an abundance of coal, waterways and sun.
But Pakistan must first escape its vicious payment cycle. The Economist magazine reports that Pakistan’s so-called circular debt to energy producers stands at $880m. It is only getting worse because of rising interest costs and dollar-rupee appreciation.
“We need to get out of the the current deals,” says Munir. But at what cost, and does this imply default? “Your guess is as good as mine,” the academic admits.
Still, he felt it was time to make his point. “I’m not defending people who don’t pay bills and I’m not promoting government subsidies to keep prices low,” Munir says. “But why isn’t anyone talking about the policy that led to this situation to begin with?”
Here's an ET report on upcoming Putin visit to Pakistan:
During Putin’s trip, the two countries are expected to sign a memorandum of understanding to push ahead with assistance for the power and gas supply projects. Representatives of Russian companies are also likely to accompany the president, who may announce investment in oil, gas and mineral exploration in Pakistan, officials say.
Under the energy cooperation programme, Pakistan has shown willingness to award a contract without bidding for the multi-billion-dollar Iran-Pakistan gas pipeline. Russia has also offered financing for the transnational Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.
The government desires to strike gas project contracts on government-to-government basis only, with no role for private Russian firms. The cabinet may be asked to waive public procurement rules for the award of pipeline contracts to Russia.
The government has already floated tenders, inviting bids for construction and procurement of pipeline for the IP project, costing $1.5 billion. According to the tender terms, the firms that promise financing will get additional points.
“Russian energy giant Gazprom may also participate in the bidding with a pledge of financing,” a government official said.
At present, Pakistan is negotiating the construction of IP gas pipeline with three countries – Iran, China and Russia.
“We will award IP contract to the country which first extends financing for constructing the pipeline, staving off pressure from the United States,” the official said.
Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’. According to the plan, Tehran will provide the pipeline and compressors on credit to Pakistan, which will make payments after two years.
Iran is also willing to provide $250 million on government-to-government basis and can extend a major part of financing from its commercial banks. Pakistan needs around $500 million to finance the pipeline.
Power, steel mill projects
“Moscow has also agreed to finance rehabilitation of Guddu and Muzaffargarh power plants and a deal may be reached in this connection during the Russian president’s visit,” an official of the Ministry of Water and Power said.
In addition to this, the two countries may enter into a deal for expansion of financially troubled Pakistan Steel Mills. During the working group meeting held late last month, they had discussed ways of enhancing the capacity of the steel mill with promise of Russian support.
Under the programme, the mill’s production capacity will be enhanced to 1.5 million tons per annum from existing 1.1 million tons. Initial cost of the project is estimated at Rs30.45 billion, though actual cost will be determined after a technical audit of the plant by a Russian company.
Russia has linked provision of financing for the project with award of contract to its state-owned firm VO Tyazhpromexport.
In the working group meeting, the Russian authorities offered $500 million for the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.
Under the project floated in 2006, 1,000 to 1,300 megawatts of surplus electricity will be imported from Tajikistan and Kyrgyzstan. “US, World Bank and Islamic Development Bank (IDB) have also backed the project,” an official said.
Shale gas extraction technology was invented in the US, and therefore US is the best source of tech know-how for it. And, as I explain, it'll be lucrative for US companies with gas prices 2-3X of what they get in US.
Here's a PakistanToday report on US help for Pak energy sector:
The US Special Envoy and Coordinator for International Energy Affairs Ambassador Carlos Pascual was in Islamabad on Friday as head of the US delegation at the fourth US-Pakistan Energy Working Group meeting.
Secretary of Water and Power Nargis Sethi and Secretary of Petroleum and Natural Resources Dr Waqar Masood Khan co-chaired the annual Energy Working Group meeting.
The meeting is part of an ongoing bilateral dialogue to help address Pakistan’s energy sector challenges, including power generation, fuel, gas, and reform priorities.
At the conclusion of the meeting, the three officials announced that the United States government will fund an international consultancy to assist Pakistan in acquiring liquefied natural gas (LNG).
Secretary of Water and Power Sethi highlighted the need for an improved and sustained governance structure as a key element for a sustainable power sector and the steps taken so far.
Special Envoy Pascual welcomed the Pakistani government’s commitment to the reform process, improving governance, improving the financial viability and efficiency of the power sector and energy sector in general, and attracting private sector investment in energy production and distribution. The Secretary of Water and Power expressed her appreciation for U.S. assistance under the power distribution improvement project and the energy efficiency programmes.
Special Envoy Pascual also welcomed Pakistan’s adoption of the 2012 Petroleum Exploration & Production Policy, noting that it that has the potential to spur investment in exploration throughout Pakistan. Secretary Khan pointed out the imminent Pakistani oil and gas delegation meetings in Houston and London to promote the auction of licenses for 60 blocks (or exploration zones). “Today, the United States government and the Government of Pakistan launched a new initiative to help Pakistan acquire liquefied natural gas more efficiently,” said Ambassador Pascual at the the working group, “This initiative shows the United States and Pakistan working together on concrete actions to relieve Pakistan’s chronic shortage of electricity. It will accelerate the liquefied natural gas procurement process and offer a cheaper alternative to Pakistan’s current fuel oil imports.” The LNG consultancy, which will commence work before the end of the year, will assist the Government of Pakistan in the terms and assessment of liquefied natural gas supply and delivery from international suppliers.
The effort will speed the procurement process, saving the government the expense of fuel oil imports that are currently used to generate much of the nation’s electricity. The consultancy will also provide market analysis and technical assistance to the government’s implementer of LNG imports. Beyond today’s agreement, the United States and Pakistan together are carrying out large-scale energy projects, that will add 900 megawatts of capacity to the power grid by the end of next year — enough to supply electricity to an estimated 2 million households.
These projects include renovating the power plant at the Tarbela Dam; modernizing the generators at the Mangla Dam; upgrading the Guddu, Jamshoro and Muzafaragarh power plants; and building the Satpara and Gomal Zam dams. US technical assistance is also supporting crucial policy and management reforms underway in the Ministry of Water and Power. These reforms are focused both on reducing the power grid’s technical losses and on increasing collections.
Here's a Dawn report on PPL exploring for oil and gas:
ISLAMABAD, Jan 8: The Pakistan Petroleum Limited, in collaboration with ENI, a foreign exploratory firm, is set to start drilling of a well in the Arabian Sea along Pakistani waters for discovery of oil.
The PPL has acquired exploration rights in a block located at 100km from Baghdad for oil exploration and it is hopeful about discovery of oil.
In a briefing to Senate Standing Committee on Petroleum and Natural Resources at the Parliament House, the PPL MD, Asif Murtaza, informed that drilling of exploratory well has already started in the block acquired in Iraq and there are bright chances of oil discovery.
In case of major success, the Pakistani company would benefit. The company is already working in Yemen on two blocks.
Regarding previous attempts made by the company to find oil from the sea, off Pakistani coast, the PPL MD informed the committee that in Mekran deep sea, some 12 exploration wells were drilled, but none succeeded.
The committee, which met with Senator Mohammad Yousuf in the chair, was informed that many foreign exploration companies still have interest in drilling of exploration well in Mekran Deep Sea. However, drilling has been delayed for one year due to various reasons.
Additional Secretary of Petroleum Naeem Malik informed the committee that drilling of an exploration well in deep-sea requires at least $100 million investment and foreign companies take decisions with due care.
The federal government recently announced new exploration incentives and the companies which would make first three discoveries in deep-sea would be given extra benefits with incentives to encourage more companies to come forward. The PPL MD informed that PPL is working in Zandan Block (Khyber Pakhtunkhwa) and is planning to acquire five more blocks in KPK as Tal Block area has great potential of discoveries.
To exploit un-conventional gas reserves in the country, some seven exploratory wells, eight appraisal wells, and 19 development wells have been planned in the next five years and the expected outcome would be 150bcf shale and tight gas production in the country.
He informed that shale gas and tight gas price approval has been sought from the regulator to speed up exploration activity. He further informed that some seven pilot projects have been planned for exploration of shale and tight gas reserves. He further informed that in Kirthar block, one exploratory well Rahman-1 is under way.
He informed that Hala, Kotri, Notari North, Jangshahi, Gambat and South blocks are potential areas for discovery of shale and tight gas reserves.
The committee was informed that PPL has geared up its seismic survey in the country and some 780sq kms were surveyed in 2011-12, while during the current fiscal year, some 1,400sq km have been surveyed.During the meeting, it was informed that District Kohlu (Balochistan) has huge gas reserves and due to law and order situation, exploration companies do not go there.
The committee was informed that the federal government was collecting 12.5 per cent royalty on gas production and the entire amount is transferred to provinces and if any provincial government is not spending the amount on welfare of its population or in the relevant district, where oil and gas have been found, it is their internal issue.
Here's ET on hydrocarbon potential in FATA and KP:
The Federally Administered Tribal Areas (Fata) and Frontier Regions (FR) have enormous reserves of minerals, oil and natural gas that can augment economic activity in the war-torn areas, a research project concluded.
Talking to The Express Tribune ‘Source Rock Mapping and Investigation of Hydrocarbon Potential (SRMIHP)’ Project Coordinator Dr Fazal Rabi Khan said that exploration and excavation of oil and gas will introduce a new era of development and prosperity in the tribal areas.
“There can be many job opportunities created for people in the tribal belt if mineral exploration and extraction is pursued properly,” said Khan, who is also the chairman of the Geology Department in Abdul Wali Khan University Mardan (Palosa Campus).
The project was launched in 2008 under an agreement between the Fata Development Authority and National Centre of Excellence in Geology University of Peshawar. The project, which was completed at an estimated cost Rs40 million, was completed in June 2012.
Khan said that their objectives include identifying hydrocarbon generating rocks and its distribution in the region, preparing a geo-database regarding hydrocarbon potential and generating a systematic data to attract oil and gas companies for exploration.
The project has successfully collected, processed and digitised the data as a result of which, 80% of the project area has been mapped digitally. “This mapping has led to the discovery of seven new oil and gas seepages.”
He added that 11 oil and gas exploration companies have reserved 16 blocks in Fata, which go across from FR Peshawar and Kohat to Khyber, Orakzai, Bannu, Tank and up to North and South Waziristan.
He said that recently 17 oil and gas exploration companies initiated their operations in Khyber, Orakzai, North and South Waziristan agencies as well as in FR Peshawar, Kohat, Bannu, Tank and DI Khan.
Khan said that Mari Gas Company, HYCARBEX Inc, Oil and Gas Development Company, Tullow, Saif Energy, MOL Pakistan Oil and Gas, Orient Petroleum International, Pakistan Petroleum, ZHEN, ZAVER and others are currently working in Fata.
Oil and Gas Development Company (OGDC) will start drilling in these areas for the exploration of oil and gas reservoirs. The chairman said that the foreign oil company, Tullow, has obtained a licence for the exploration of oil and gas in North Waziristan Agency and Bannu, while MOL has shown interest in Khyber Agency, Kohat and Peshawar.
“Although law and order problems can become a hindrance, the project can be managed considering its importance,” he added.
Khan elaborated that the process in Fata would not only help overcome the energy crisis but will also give a big boost to efforts for the socio-economic development of the region. Khyber-Pakhtunkhwa is teeming with minerals and Fata is a new oil estate, he said. “In the next five years, this province will produce more oil than Dubai and as far as shortage of gas is concerned, the hills of FR Tank are full of it.”
He said Governor Masood Kausar has also taken keen interest in the project. “The best news for the tribal areas is that there are large reserves of natural resources and foreign and local companies interested in its extraction can exploit the resources,” said Kausar.
Here's a report on Iran-Pak gas pipeline deal by AEI, a conservative American think tank:
On January 30, Pakistan’s cabinet ratified a $1.5 billion agreement with Iran for the laying of nearly 500 miles of pipeline in Pakistan that would connect the country’s gas infrastructure to Iran’s massive South Pars natural gas fields. The pipeline would potentially add over 750 million cubic feet of gas per day to Pakistan’s grid at a time when the country faces crippling energy shortages with some cities suffering frequent protests against 20 hour-long power outages.
Iran offered cash-strapped Pakistan over $500 million in financing to lay the Pakistani section of the pipeline after several private and sovereign foreign entities backed out of the plan over fears of incurring U.S. ire for participating in the project (and when Pakistan refused to award contracts to some without bidding). The Iranians have offered even more funding if the Pakistanis demonstrate seriousness in going ahead with and completing the project. Pakistan, in return, has offered the contract for the construction of the Pakistani segment of the pipeline to an Iranian company called Tadbir Energy (Iran has already largely completed its section).
Tadbir Energy is an Iranian firm that “isn’t sanctioned by any foreign government,” and in July 2012, it made a bid to take over the failing Petit-Couronne refinery in France. The Iranian firm, however, is a subsidiary of the Headquarters for Implementing the Imam’s Directive (HIID), also known as the Imam Khomeini Foundation, an investment firm linked to Iran’s Office of the Supreme Leader. The European Union sanctioned the president of HIID, Mohammad Mokhber, in 2010 for his involvement in Iranian “nuclear or ballistic missiles activities.” Mokhber is also a member of the Sina Bank board of directors, sanctioned by the European Union for its close ties to the Office of the Supreme Leader.
It will be important to watch whether the conclusion of the pipeline agreement leads to further cracks in the U.S.-Pakistan relationship, especially at a time when the U.S. appears to be looking to Pakistan to help facilitate reconciliation in Afghanistan as the U.S. continues to draw down troops from the country. Former Secretary of State Hillary Clinton warned in March 2012 that “beginning the construction of [the] pipeline, either as an Iranian project or as a joint project, would violate [U.S.] Iran sanctions law.” For a time, it appeared as if Pakistan was sensitive to U.S. concerns over Iran and gave some indications that it may scrap or indefinitely delay the pipeline project due to U.S. objections. Pakistan appears now to have calculated that its short-term energy needs are too great, and the threat of U.S. sanctions not strong enough, for it to forgo the deal.
It will also be important to monitor whether Pakistan’s decision to cut a deal with the Iranians has a significant impact on loosening western sanctions on Iran and what sanctions or other fallout, if any, it may face for spurning U.S. entreaties vis-à-vis Iran and engaging with an Iranian company closely linked to already-sanctioned entities.
Here's a BR report on unconventional oil ad gas policy in Pakistan:
Advisor to Prime Minister on Petroleumand Natural Resources Dr. Asim said that Pakistan offers great potential in the oil and gas sector and the government is doing its part by introducing new policies to meet the rising energy demand .
He was presiding over a seminar organized by the Petroleum Institute of Pakistan (PIP), a representative body of the oil and gas industry, on the topic "Shale Gas Potential in Pakistan" on Saturday.
The purpose of holding this seminar was to create awareness aboutpotential and challenges of shale gas in Pakistan and establish PIP'sprofessional standing in view of assisting the government on dealing with the energy crises in the country.
The forum consisted of 150 distinguished guests from the oil and gas fraternity including government officials, media personnel and students from Karachi's top universities/colleges.
Dr. Asim Hussain said he has been advocating the need to balancecountry's energy mix, which currently is heavily dependent on natural gas.
He stated that the US Energy Information Administration have estimated 51 TCF Shale Gas Reserves in Pakistan, while as estimated reserves for Low BTU Gas are 2 TCF and that of tight gas are 40 TCF.
He added that Shale Gas exploration is high technical and costly, therefore, in order to encourage its exploration, pilot projects are planned.
The Ministry of Petroleum and Natural Resources will facilitate E&P Companies wishing to explore shale gas, by granting special concessions through transparent process and based on merit.
Chairman PIP Asim Murtaza Khan stressed on PIP's role as an effective energy sector advisory body, supporting government and industry in Pakistan todevelop a progressive and sustainable roadmap to meet present and futurechallenges.
He said that PIP is planning to hold series of seminars in nearfuture. The big ticket items that will be discussed and which need theimmediate attention will be the "LPG Outlook in Pakistan", "Fast-trackingimports of LNG", "Refining Vision 2020", "Energy conservation" and"Restructuring of the Pakistan's gas sector".
Here's a PakObserver report on possible US energy assistance for Pakistan:
With Pakistan fast heading to sign transnational pipeline project with Iran, US is most likely to offer a comprehensive but conditional energy assistance package as alternate to the Iranian gas.
According to diplomatic sources, the Obama Administration was contemplating to use a luring carrot this time to make Pakistan deliver in the so-called endgame in Afghanistan, besides refraining from translational gas pipeline from Iran.
Since the American strategists were working on a long-term plan to keep an influence centre in Afghanistan even after announced withdrawal of US/Nato troops from the war-torn country, they need Pakistan as a strategic partner even beyond war on terror. “That is why you hear a lot of talk back in Washington about focussing on Pakistan as a long-term partner rather than just a war ally or a facilitator of the endgame,” the sources pointed out.
The sources were of the view juxtaposition of anti-Iran and anti-drones sentiments in the American society may benefit this time in terms of a comprehensive American energy assistance package. “But this time the governments in Pakistan would have to deliver, if they really need their energy woes to be done away with,” the sources added. Consistent voices against the drones from within and outside Pakistan have perhaps made US Administration to understand that drones were practically appearing to be counter productive to the war on terror entering the decisive phase now, they underlined.
Other than strategic and political conditionality attached to prospective energy assistance package, the government in Pakistan would have to expand tax net, end blindfold government borrowing, and culture of vague subsidies.
When asked to comment on possibilities of a new US energy assistance package, US Embassy spokesperson Rian Harris said such proposals and details are not known at the embassy level in advance.
Asked what US law bars Pakistan or any other nation to indulge in business with Iran as India was also buying oil from the same country, she said, “US policy on Iran has not changed.”
“U.S. policy on Iran is well known. We have made it clear to all our interlocutors around the world that it is in their interests to avoid activities that may be prohibited by UN sanctions or sanctionable under U.S. law,” she went on.
“We recognise that Pakistan has significant energy requirements and US are committed to helping alleviate shortfalls,” Rain adds
She reminded, that is why we have invested in major energy infrastructure projects, such as renovating the Tarbela and Mangla dams, modernising the thermal power plants in Guddu, Jamshoro and Muzaffargarh, and building the Satpara and Gomal Zam dams.
These efforts have already added more than 400 megawatts of power to the national grid, and will add a total of 950MW — enough power for 2 million households — by the end of this year,” she said.
Asked how India was exempted from sanctions and buying oil from Iran, she said, “the National Defence Authorisation Act provides the ability to grant exceptions of 180 days to those countries that demonstrate they are significantly reducing their volumes of crude oil imports from Iran.
In December the Secretary of State granted exemptions to nine economies that demonstrated significant reductions of crude oil imports, including India.
Economies must take continuous steps to earn a renewal of the exemption for another 180 days through continued reductions in their purchases,” she concluded.
Here's Dawn on US energy help for Pakistan:
US Ambassador Richard Olson reiterated on Tuesday the commitment of the United States to extend full help and cooperation in resolving the energy crisis faced by Pakistan.
Addressing a function here at Tarbela Dam project, along with Water and Power Development Authority (Wapda) Chairman Syed Raghib Abbas Shah to recognise the completion of the US funded Tarbela Dam restoration project the US ambassador said, “The United States understands that Pakistan is facing an energy crisis and we are committed to doing our part.”
The restoration of three generators at Tarbela added 128 megawatts of power to the national grid.
He said, “The work completed here at Tarbela contributes enough electricity to supply two million customers, and helps provide relief to those suffering from extensive power shortages.”
Wapda Chairman Syed Raghib Abbas Shah appreciated the support of the United States to the energy sector in Pakistan.
The US Agency for International Development (USAID) provided $16.5 million to the Pakistan Wapda to repair three power generation units and to train Tarbela’s staff to operate the upgraded equipment to increase production of electricity at Tarbela.
Relieving Pakistan’s energy crisis is a top priority for US assistance to Pakistan, said Olson.
In addition to Tarbela, the United States is also funding other high impact projects, such as the rehabilitation of the Mangla dam, and renovation of thermal plants at Jamshoro, Guddu, and Muzaffagarh, which have already added over 650 megawatts since October 2009.
The US government is also co-financing the completion of the Gomal Zam and Satpara dams which will add another 35 megawatts and irrigate more than 200,000 acres.
Finally, the US is helping to replace thousands of highly inefficient agricultural and municipal water pumps throughout the country to save additional megawatts.
These projects are expected to add 900 megawatts to the national power grid by the end of 2013, enough energy to power two million households and businesses.
Here's ET piece on energy-hungry South Asia looking to energy-rich Central Asia:
.Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan are all rich in oil and gas. According to available data, they have a combined 8.2 billion tons of proven oil reserves and 8.4 trillion cubic metres of natural gas reserves.
On the other side, South Asia faces a deficit in energy, rapidly picking up on economic growth. Connecting South Asian energy consumption centres to energy-rich Central Asian states is a win-win solution. It can bring economic growth to Central Asia through oil and gas revenues, and it can help South Asia continue on the path of stable economic growth and prepare the subcontinent as a future consumption market, which can support trade needed to sustain G-8 countries at the present level.---------
At the moment, three principal gas pipelines can bring gas to the subcontinent. These are the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI), the Qatar-Pakistan-India (QPI) submarine gas pipeline, and the Iran-Pakistan-India (IPI) gas pipeline. The QPI, for a considerable portion, has to be laid down in the seabed of the Arabian Sea. The option, at present, is too expensive to be adopted. Even after completion, its estimated annual maintenance cost is a considerable portion of the profit margin, and the host consortium may not find it feasible to run.
A Memorandum of Understanding (MoU) was signed on March 15, 1995, between Turkmenistan and Pakistan to build a gas pipeline from the Daulatabad gas field in Turkmenistan to Multan in southern Punjab. US company Unocal, in consort with Saudi oil company Delta, prepared to start work on the project. The two companies later joined the CentGas consortium in which several international petroleum companies joined in, including Russian petroleum giant Gazprom.
Later on, in June 1998, Gazprom relinquished its share in the project, while Unocal withdrew in August 1998 after attacks on American Embassies in Nairobi and Darussalam. The project was then put on the backburner.
The $7.6 billion pipeline, with initial capacity of 27 billion cubic metres of natural gas per year, will deliver 2 billion cubic metres of gas to Afghanistan and 12.5 billion cubic metres each to Pakistan and India.
The proposed pipeline was designed to bring gas to Pakistan and India. The pipeline can initially supply 22 billion cubic metres of natural gas per year, which was expected to be raised later to 55 billion cubic metres per year. The project was supposed to be commissioned by 2013 (this year) at a cost of $7.5 billion. After reaching Multan, a spur line had been proposed, which would deliver gas to India. Under the gas purchase agreement, Pakistan was supposed to get gas at a price of $11 per million British thermal units (MMBTU). The price is $2 per MMBTU cheaper than the TAPI pipeline gas, which costs $13 per MMBTU. The Iranian gas is also $7 per MMBTU cheaper than imported LNG.
In 2008, after signing a civilian nuclear deal with the US, India withdrew from the project.
Pakistan’s federal government in January this year has approved a $1.5 billion government-to-government deal with Iran for laying the 785-kilometre segment of the pipeline in Pakistan. The federal cabinet has finally approved the project, and a special committee has been formed to expedite it. The US has been quick to register its concerns over the deal.
South Asian consumption
In Pakistan per capita natural gas consumption in 2010 was 229 cubic metres, whereas in India this is as low as 55 cubic metres..
Here's an Oilprice report on "water flooding" to extract oil from shale in US:
The cheapest and most profitable oil North America has ever seen is now “flooding” into the market, as producers once again use old technology to create a wave of new profits.
Producers are using “waterfloods”— pushing water into underground formations to flush a large amount of oil out to nearby producing wells — to increase production and profits. It’s the next big money-making phase of the Shale Revolution.
Waterflooding has been around for 70 years or more, but the Big Question over the last five years has been — can you do it effectively with tight oil?
The answer is a Big Yes, and waterflood potential has become so important that institutional investors now see them as major share price catalysts for junior producers—and track them closely.
Waterfloods start 1-2 years after drilling the well, in a time window producers call “secondary recovery.” (Drilling is primary recovery.) Waterfloods are cheap to try and cheap to run (with most operations costing just $5-10 per barrel!), and now the industry is seeing that they are sometimes doubling reserves from a well.
“Secondary recovery is where you really make all your money in this industry,” says Dan Toews, VP Finance and CFO of Pinecrest Energy (PRY-TSX.V).
Pinecrest is very vocal about their waterflood potential. They say they can double the amount of oil they recover (called the Recovery Factor, or RF) from a well — at less than $15/barrel — half the price of primary recovery costs, which are over $30/barrel.
“Everyone is trying to find a new resource play,” says Toews. “First you find a resource, and then you drill it like crazy. But the second stage is to go in for your secondary recovery, through waterflooding of some kind if possible.”
To date, Pinecrest isn’t yet flowing even one barrel of waterflooded oil—so their powerpoint slide is just projections. Toews and his team expect to be waterflooding all of their operations by the end of this quarter. But analysts are already seeing the waterfloods as a share price catalyst.
“Just about every investor and institution we talk to wants to know the status with our waterfloods,” says Toews. “The buy side (fund managers = buy side, brokerage firms = sell side—ed.) is very savvy on waterfloods. Once we apply the method, this is what has the potential to shoot up our share prices.”
Realistically, the effects can be seen within 2-3 months, but it’s best to give them a year—or more—of operations before judging their impact. Waterfloods can last up to 20 years or more.
Another Canadian oil junior, Raging River Exploration (RRX-TSX), also explains the waterflood potential in their powerpoint. They expect to be swimming in 1 million EXTRA recoverable barrels of oil per square mile, courtesy of waterfloods—at an even cheaper cost of $5-10 barrel, vs $30 barrel for the first 600,000 barrels.
Raging River is developing the Viking formation in SW Saskatchewan—a large, tight oil play that since the 1950s has had an improved outlook from 2 billion barrels of oil to an estimated 6 billion barrels of oil in place, all thanks to horizontal drilling.
Raging River expects waterflooding to increase its RF from 8% from primary recovery methods (drilling vertical and horizontal wells) using 16 wells/section, to 16-20%. The simple math says that will increase the number of barrels recovered from 480 million at 8% to 1.25 billion at 20% RF.
If Raging River—or any producer—can show a steady RF for over a year, I would suggest to investors those barrels will be worth $10-$15 each—creating huge value to shareholders on a buyout.
Some Viking waterfloods have even seen results as high as 30% RF....
Here's an ET report on a partnership for off-shore drilling for oil in Pakistan:
State-run Pakistan Petroleum Limited (PPL) and Singapore-based oil and gas company Orion Energy are likely to form a joint venture for offshore drilling in Pakistan.
Orion Energy, an independent oil and gas company headquartered in Singapore and with offices in London, is currently exploring scores of opportunities in Latin America.
According to sources, Orion had expressed interest in investing in Pakistan at the Pakistan Exploration Bidding Round 2012, held in London in December 2012 by the Pakistan Peoples Party-led coalition government.
On the sidelines of the event, Orion Energy Director David M Thomas, and his lawyer Nadim Khan, met the PPL managing director. The interaction was followed by another meeting between representatives of PPL and Orion, chaired by the director general of petroleum concessions.
In the Petroleum Policy 2012, the government had increased the gas price for Offshore Shallow Zone to $7 per million British thermal units (mmbtu), for Offshore Deep Zone to $8 per mmbtu and for Offshore Ultra Deep Zone to $9 per mmbtu. A bonanza of $1 per mmbtu will be given to exploration companies for the first three offshore discoveries under the policy.
Orion Energy had expressed interest in exploring offshore areas in Pakistan in partnership with PPL because of the latter’s good reputation and extensive experience in exploration and production of gas.
Following extensive technical discussions and encouraging feedback from PPL, the two companies agreed to initially undertake a joint study to evaluate prospects of offshore drilling and identify prospective areas for comprehensive exploration work.
Orion Energy had also expressed a desire to come to Pakistan for technical discussions with PPL on offshore exploration and on matters pertaining to forming a joint venture to carry out the joint study. Both sides had also finalised a joint study agreement, which had been ready to be signed by officials.
However, the visit was delayed due to general elections in Pakistan. It was only later, in the first week of June, that an Orion team reached here.
Technical staff from Orion and PPL will undertake the study, based on the geological data available with the two companies and the directorate general of petroleum concessions. The study will be completed in about four months, and its main objective will be to identify potential offshore areas for detailed evaluation through an exploration work programme and the financial obligations that will entail.
Pakistan's energy giant the Oil and Gas Development Company Limited has earned record after-tax profit of Rs 124 billion in the last financial year, registering 36 per cent growth.
The 17th annual general meeting of Oil and Gas Development Company Limited (OGDCL) was informed yesterday that the company's sales revenue grew by 15 per cent to Rs 257 billion, state-run Associated Press of Pakistan reported.
The meeting also reviewed company's performance during the last financial year and was informed that earnings per share had gone up to Rs 28.81.
The national oil and gas company of Pakistan also contributed Rs 132.26 billion to the national exchequer on account of corporate tax, dividend, royalty, general sales tax and excise duty.
Chairman Zahid Muzaffar told the meeting that OGDCL has continued to deliver robust financial results coupled with steady operational performance.
The company acquired 29 new exploratory blocks and the current concession portfolio consists of 62 owned and operated joint venture exploration licences along with holding working interest in six blocks operated by other E&P companies.
Steep drop in oil and gas prices is depressing investment in shale and other alternatives.
Chevron just abandoned shale exploration in Poland.
From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"
ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.
“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”
An agreement with Qatar is expected by early March, Pakistani officials say.
The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.
The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.
Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.
The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.
Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.
Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”
According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.
Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.
The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.
“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”
Qatar is the world’s biggest producer and exporter of LNG.
Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.
Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.
“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.
The first shipment of LNG is scheduled to arrive in Pakistan on 26 March 2015, according to local reports.
Sources suggest that Qatargas has sold the LNG to Pakistan at approximately US$8 – 9/million Btu.
The government of Pakistan is keen to secure supplies of LNG from Qatar to help ease the energy crisis that is currently plaguing the country. Last year, Engro Corp.’s subsidiary, Elengy Terminal Pakistan Limited (ETPL), won the contract to develop Pakistan’s first LNG import infrastructure within a 335-day deadline.
Engro Corp. prepared an exclusive article discussing the regasification project for the March 2015 issue of LNG Industry. In the article, Engro explained the extent of the energy crisis in Pakistan:
Pakistan’s demand for gas [is] expected to double in the next 10 years and current gas production at 4 billion ft3/d was less than the required 6 billion ft3/d. At the current rate of growth, the demand could touch 13 billion ft3/d by 2020.
If this happens, the energy conundrum in the country could well become an energy catastrophe. Towns and rural areas will be in perpetual darkness, and a majority of the industrial units will be forced to shut down or remain uncompetitive. Consequently, unemployment will increase, a greater majority of Pakistanis will fall below the poverty line, food inflation will become rampant, and social indicators will be well below that of sub-Saharan countries.
By this time, Pakistan will only be able to meet 41% of its energy requirements and will have an energy import bill of US$52 billion. With no end in sight, the repercussions of Pakistan’s ongoing energy crisis are severe and go well beyond threats to the country’s economic well-being and stability.
Hence, it is imperative to look for an alternative source of gas in Pakistan. Importing LNG will enable the government to save significant foreign exchange through import substitution of oil, and will alleviate the energy crisis plaguing the country.
#Hungary's MOL makes it an even dozen #oil & #gas discoveries in #Pakistan http://upi.com/6332948t via @crudeoilprices
Hungarian energy company MOL said Friday it made a new discovery of oil and gas in Pakistan, bringing the total there so far to an even dozen.
Operating through a national subsidiary in Pakistan, the company said its discovery in the so-called TAL block in Pakistan is No. 8 so far in that basin and No. 12 in its history in the country. MOL has worked in Pakistan for the last 17 years.
"We are very proud of our 8th discovery in the MOL-operated TAL block," Berislav Gaso, MOL's chief officer for exploration and production, said in a statement. "This new discovery will help to improve the energy security of the country."
Pakistan consumes most of the natural gas it produces and the country has faced power issues because of aging infrastructure. According to the Asian Development Bank, addressing chronic energy issues is one of the ways in which Pakistan can ensure its economic growth remains on course.
Pakistan's economy is expected to expand from a 4.2 percent growth rate in 2015 to 4.8 percent by next year. A net importer of energy resources, the ADB said lower oil prices and soft inflationary pressures were pushing Pakistan's economy forward.
MOL said it was producing around 80,000 barrels of oil equivalent per day from the TAL block so far. Reserves flowed from the latest confirmed discovery at a test rate of around 2,000 barrels of oil per day and 900 barrels of oil equivalent in natural gas per day.
#ExxonMobil acquires 25% stake in #offshore #oil and #gas drilling in #Pakistan. Other stakeholders: Government Holdings Private Limited (GHPL), PPL, #Italy's Eni and OGDC.
In a major development, US energy giant ExxonMobil has acquired 25% shareholding in offshore drilling in Pakistan.
Earlier, Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and Italian energy firm Eni had 33% stake each in offshore drilling in the country. Now, ExxonMobil has acquired 25% shareholding, reducing the share of all partner companies to 25% each.
An agreement in that regard was signed at the Prime Minister’s Secretariat on Monday among ExxonMobil, Government Holdings Private Limited (GHPL), PPL, Eni and OGDC.
ExxonMobil has vast experience of offshore drilling for the search of hydrocarbons and it will help boost efforts of partner companies for oil and gas exploration in the country.
Offshore drilling has brought a revolution in the US oil and gas market and even shaken the monopoly of Organisation of Petroleum Exporting Countries (OPEC) – a global grouping of major oil producers and exporters.
Oil falls as OPEC, Russia look to raise output amid US surge
A new technology in offshore drilling is a major reason behind the boost to shale oil and gas exploration and officials believe ExxonMobil will help bring state-of-the-art technology to Pakistan. The company has been working on oil and gas exploration in different countries and Pakistan has now become part of its expansion plan.
“An agreement has been signed with ExxonMobil that will acquire 25% shares in offshore drilling in Pakistan,” GHPL Managing Director Mobin Saulat told The Express Tribune.
Oil refinery to be set up in Kohat
Another official said a study would be conducted in the potential areas allocated to the four companies before undertaking drilling activities.
In its first assessment, the US Agency for International Development (USAID) estimated that Pakistan had massive deposits of 10,159 trillion cubic feet of shale gas and 2.3 trillion barrels of shale oil – figures that were several times higher than those released by the US Energy Information Administration (EIA).
According to the EIA assessment in April 2011, Pakistan had 206 trillion cubic feet of shale gas in the lower Indus Basin, of which 51 trillion cubic feet were recoverable. However, in June 2013, it revised the estimate upwards to 586 trillion cubic feet, of which 105 trillion cubic feet were technically recoverable.
Apart from this, the EIA saw the presence of 9.1 billion barrels of shale oil that were technically recoverable out of estimated deposits of 227 billion barrels.
Why Canada is the next frontier for shale oil
In its study, the USAID collected data of 1,611 wells, used 70% of data to prepare the study and sent samples to New Tech Laboratory in Houston for assessment.
Though technology is available in advanced countries for tapping shale reserves, environmental concerns, requirement of a huge quantity of water and high cost of drilling are real challenges. A well requires three to eight million barrels of water. Pakistan has water supplies, but the real issue is its disposal.
Estimates suggest shale gas will cost $10 per million British thermal units, which will come down with the increase in recovery of untapped reserves.
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