Thursday, July 11, 2013

Why Blackouts and Bailouts in Energy-Rich Pakistan?

Frequent IMF bailouts and power blackouts in energy-rich Pakistan are closely tied. One of the key reasons for recurring balance-of-payment crises is the country's rapidly rising oil import bill. The lack of sufficient fuel exacerbates load shedding, negatively impacts economy, reduces tax revenue growth and worsens current account and budget deficits. This requires repeated injections of IMF loans in US dollars to meet import requirements and deal with budget shortfalls.

Pakistan Energy Infrastructure (Source: PPEPCA)


Pakistan's Untapped Energy Riches:

1. Shale Oil:

A recent US EIA report released in June 2013 estimates Pakistan's total shale oil  reserves at 227 billion barrels of which 9.1 billion barrels are technically recoverable with today's technology. In fact, US EIA (Energy Information Administration) puts Pakistan among the top ten countries by recoverable shale oil reserves. These include Russia (75 billion barrels), United States (58 billion barrels), China (32 billion barrels), Argentina (27 billion barrels), Libya (26 billion barrels), Venezuela (13 billion barrels), Mexico (13 billion barrels), Pakistan (9.1 billion barrels), Canada (8.8 billion barrels) and Indonesia (7.9 billion barrels).

2. Shale Gas:

The latest US EIA report has raised estimates of Pakistan's recoverable shale gas reserves from 51 trillion cubic feet to 105 trillion cubic feet. It says Pakistan has 586 trillion cubic feet of shale gas of which 105 trillion cubic feet (up from 51 trillion cubic feet reported in 2011) is technically recoverable with current technology.

3. Tight Gas:

Rough estimates indicate the presence of at least 33 trillion cubic feet of unconventional gas reserves trapped in tight sands, according to an ENI Pakistan report. Another report by Shahab Alam, technical director of Pakistan Petroleum Concessions, puts the estimate at 40 trillion cubic feet of tight gas reserves in the country. These unconventional gas reserves are in addition to the remaining conventional proven gas reserves of over 30 trillion cubic feet.

4. Conventional Gas:

In addition to unconventional oil and gas resources, Pakistan also has about 30 trillion cubic feet of remaining conventional natural gas.

5. Thar Coal:

Pakistan's coal reserves in the Thar desert are estimated at 175 billion tons, according to  Geological Survey of Pakistan. It's low BTU content coal.  The carbon content of Thar lignite is around 60-80%; the rest is composed of water, air, hydrogen, and sulfur. It's hard to transport it but it can used to generate electricity in an integrated mining-generation facility.

6. Hydro:

Pakistan's hydroelectric potential is over 100,000 MW of electricity of which 59,000 MW can come from currently identified sites by the nation's Water and Power Development Authority (WAPDA).

7. Wind:

According to data published by Miriam Katz of Environmental Peace Review, Pakistan is fortunate to have something many other countries do not, which are high wind speeds near major centers. Near Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per second (between 13.8 and 16.5 miles per hour). Near Karachi, the range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per hour). In only the Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 megawatts of electricity, says Ms. Katz who has studied and written about alternative energy potential in South Asia.

8. Solar:

Pakistan is an exceptionally sunny country. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand. Solar energy makes much sense for Pakistan for several reasons: firstly, very large population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Center (SERC). Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially.

Summary:

Pakistan's frequent bailouts and blackouts are clearly related. The key to solving these interlinked crises is to put high priority on developing the country's vast but untapped domestic energy resources identified above. These include shale oil, shale gas, tight gas, Thar coal, hydro and renewables like solar and wind. Reducing Pakistan's dependence on energy imports is also the key to making the nation less vulnerable to recurring external shocks from energy prices which vary wildly with international political and economic events and crises.

Related Links:

Haq's Musings

US EIA Estimates Pakistan's Shale Oil Reserves at 9.1 Billion Barrels

Pakistan's Vast Shale Gas Reserves

Pakistan's Energy History

Cheap Coal Electricity

Potential Renewable Energy Resources in Pakistan

Hydroelectricity Potential in Pakistan

US EIA Shale Oil and Gas Report 2013


47 comments:

Javed said...

There has been a consistent policy failures , hope these do not continue although a compherensive energy policy and it's sub set a power policy is still not in place ( at least has not been announced or presented at any forum that leads to public information ) , my disappointment is that these should have been formulated even before forming the government and precious time is now being lost .

Riaz Haq said...

Javed: "There has been a consistent policy failures , hope these do not continue..."

I agree that it's been a collective failure of successive Pakistani governments in developing the nation's energy sector which has had broad implications for Pakistani economy and public finances. My hope is that Nawaz Sharif's administration has learned from these failures and will do better this time around.

Kadeer said...

This is an oft-repeated problem like many others that the country is facing. If you look at things globally, the country is falling behind competitively in many areas in spite of the talents of many Pakistanis.

My question is, what is the diaspora doing? Apart from sending money to their families, I only see very minor investments by an educated diaspora. That is a tragedy!

HopeWins Junior said...

Did you hear this news?

"Pakistan major player in world research"
http://alturl.com/ppufp

Wow! Astonishing progress. Do you think it's true?

HopeWins Junior said...

^^RH: "Frequent IMF bailouts and power blackouts in energy-rich Pakistan are closely tied."

"Summary: Pakistan's frequent bailouts and blackouts are clearly related."
--------

These are very strong statements. But are they really true?

Let us see:

(1) In the last 30 years, IMF has bailed out Pakistan in 1989, 1991, 1994, 1998, 2008.
http://alturl.com/sxgs5

(2) Were there these blackouts in 1989, 1991, 1994, 1998?

No, there were not these blackouts. In fact, in September 2003, India had approached us to see if we could supply them with electricity from some of our surplus capacity.

These massive blackouts are a recent phenomenon and have historically not been connected to IMF bailouts.

Do you disagree?



Riaz Haq said...

HWJ: "These massive blackouts are a recent phenomenon and have historically not been connected to IMF bailouts."

It's true that the problem has gotten worse in recent years with increasing gap between domestic gas production and demand necessitating expensive oil imports.

Meanwhile, the oil prices have risen from about $15 a barrel in 1990s to about $100 a barrel now.

So both of these phenomena (bailouts and blackouts) have been the direct results of rising expensive energy imports causing a ballooning of Pakistan's current account deficits and budget deficits.

Three quarters of Pakistan's current export-import gap of about $20 billion is accounted for by oil imports of about $15 billion.

In addition, a significant chunk of Pakistan's budget deficit is because of power subsidies amounting to several billion dollars a year.

HopeWins Junior said...

Qadeer said: "My question is, what is the diaspora doing? Apart from sending money to their families, I only see very minor investments by an educated diaspora. That is a tragedy!"
------------

The "sending money to their families" part is EXACTLY what is keeping Pakistan afloat right now.

Without these remittances, our economy would have completely COLLAPSED by now.

You can gauge for yourself in our FY 2013 data from the Finance Ministry:

http://finance.gov.pk/survey/chapters_13/01-Growth%20and%20Investment.pdf

1)Domestic Savings = 20 Billion$
2)Remittances = 14 Billion$
3)Foreign Investment = 1.6 Billion$
4)Total Investment = 35.6 Billion$

Note that (4) = (1)+(2)+(3)

HopeWins Junior said...

^^RH: "Meanwhile, the oil prices have risen from about $15 a barrel in 1990s to about $100 a barrel now.

So both of these phenomena (bailouts and blackouts) have been the direct results of rising expensive energy imports causing a ballooning of Pakistan's current account deficits and budget deficits. "
-----

Is it correct to say that in your view, the MAIN difference between India and Pakistan is this:

The bulk of our electricity is primarily generated from imported fuel, which we have to buy in dollars.

The bulk of their electricity, on the other hand, is generated from domestic coal, which they buy in their local rupees.

Is this your view?

Riaz Haq said...

HWJ: "Is it correct to say that in your view, the MAIN difference between India and Pakistan is this:
The bulk of our electricity is primarily generated from imported fuel, which we have to buy in dollars. The bulk of their electricity, on the other hand, is generated from domestic coal, which they buy in their local rupees. Is this your view?"

India too has huge current account deficits and regular power blackouts in spite of using coal to generate electricity.

India also runs large budget deficits and heavily subsidizes its power sector....less so than Pakistan because coal electricity costs significantly less.

The main reason India has not ended up with IMF since 1980s is that it has attracted significant FDI and FII to close the gap between its exports and imports....but Jim O'Neill of Goldman Sachs (who coined BRIC) has recently warned that India too could end up with a serious BoP crisis requiring IMF bailout.

Riaz Haq said...

Here are a couple of news items on Pakistani imports in 2012-13:

Dawn:

Statistics showed the oil import bill reached $13.937 billion in July-May this year as against $10.467 billion over the last year, indicating an increase of 33.15 per cent.

http://beta.dawn.com/news/728216/import-bill-increases

Daily Times:

The country has suffered $20.432 billion trade deficit during last fiscal year 2012-13, according to the official figures released by Pakistan Bureau of Statistics on Friday.

July to June: The exports from Pakistan during last 12 months of the last fiscal year 2012-13 were recorded at $24.518 billion as compared with exports of $23.624 billion in the same period of previous fiscal year 2011-12, projecting an increase of 3.76 percent.


http://www.dailytimes.com.pk/default.asp?page=2013%5C07%5C13%5Cstory_13-7-2013_pg5_1

Argus said...

You may be possibly right, but pray tell us just WHO is going to develop these "vast" resources and more importantly, HOW? The WHEN can be explained later if you can answer these first two questions.

Riaz Haq said...

Argus: "You may be possibly right, but pray tell us just WHO is going to develop these "vast" resources and more importantly, HOW? The WHEN can be explained later if you can answer these first two questions."

Pakistanis. The same Pakistanis who have been exploring and developing oil and gas reserves in Pakistan for years....Pakistani companies like OGDL and PPL in partnership with foreign companies like PGNiG and ENI and UEP and others.

Who else?

Are you expecting angels to descend from the heaven to do it?

Argus said...

The same Pakistanis who have done such a great job of providing power to the country?! Right you are. We can already see just how successful this premise of yours is going to be, Sir. The record speaks for itself, loud and clear

Riaz Haq said...

Argus: "The same Pakistanis who have done such a great job of providing power to the country?! Right you are. We can already see just how successful this premise of yours is going to be, Sir. The record speaks for itself, loud and clear"

Do you understand the difference between fuel and electricity?

Do you know that Pakistan had abundance of gas until a few years ago? the gas that was explored and developed by PPL? the gas that powered munch of the electricity generation?

Do you realize that OGDC and PPL have a lot of professional talent quite capable of doing the job?

Do you know that tight gas production by PGNiG and PPL has already started in Sajawal?

Have you any clue about the energy history of Pakistan since 1947? If not, I suggest you read Energy and Security in South Asia by Charles Ebinger.

http://books.google.com/books?id=AOtbeFN3b9sC&printsec=frontcover&dq=Energy+and+Security+in+South+Asia:+Cooperation+or+Conflict?&hl=en&sa=X&ei=iq3iUeLjKcG0iQKmpIBQ&ved=0CC8Q6AEwAA#v=onepage&q=pakistan&f=false

Stop being such a cynic! Don't give up on Pakistan!!

Argus said...

I have no cynicism, only realism. I have not given up on Pakistan, but neither do I believe in fraudulent claims that better times are just around the corner.

Riaz Haq said...

Argus: "I have no cynicism, only realism. I have not given up on Pakistan, but neither do I believe in fraudulent claims that better times are just around the corner."

You don't just see Pakistan's glass half empty, you see it as completely empty with no hope of filling it.

There's nothing more toxic for a nation than the kind of cynicism you regularly express.

In spite of all of its problems, Pakistanis have accomplished a lot in the last 66 years.

Pakistan is a resilient nation with an upwardly mobile population.

http://www.riazhaq.com/2012/08/upwardly-mobile-pakistan-on-66th.html

HopeWins Junior said...

^^RH: "There's nothing more toxic for a nation than the kind of cynicism you regularly express."
------

Yes, I agree that excessive cynicism is toxic to a nation. But I would point out that irrational optimistic propaganda can also be toxic to a nation.

However, the thing that is the MOST toxic to a nation is the LACK of SAVINGS and a demonstrated history of the inability to increase the same.
http://alturl.com/73vfy

This is the ONE FAILURE that SEALS a nation's fate. It is very difficult to change and is yet the best predictor of future outcome. Once it happens, the outcome from there on is almost destiny.

Do you disagree?

Riaz Haq said...

Here's a Dawn story on US help for Pakistan's energy sector:

ISLAMABAD: Pakistan and United States on Tuesday agreed to enhance cooperation in energy sector with special focus on development of bio-gas and wind energy to help Pakistan overcome power crisis.

Pakistan needs investment, particularly in the most needed energy sector, said Finance Minister Ishaq Dar while addressing a joint press conference along with President Overseas Private Investment Corporation (OPIC), Elizabeth L. Littlefield, who was heading the US delegation in talks with Pakistan.

Earlier, US delegation held detailed discussions with Pakistan’s economic and energy managers led by the finance minister and discussed various issues related to investment in various sectors of economy, particularly in energy sector.

Dar told media representatives that talks with the Opic were the part of government's efforts to bring foreign investment into the country and help enhance economic growth.

He said that both the countries agreed in principle to continue dialogue on Civil Nuclear Technology cooperation. However, he added that no timeline could be given for any future agreement on the issue.

The finance minister said that Independent Power Producers (IPPs) have capability to generate more electricity and the government has paid circular debt to enhance generation capacity.

He said both the sides also agreed to continue dialogue on the pending issues of Bilateral Investment Treaty (BIT) to tap the investment potential.

Terming the terrorism as one of the challenges the country was facing, Ishaq Dar said the government was committed to come up with a comprehensive strategy by taking onboard all political parties to overcome this menace.

He said that ensuring transparency and good governance were among the top priorities of the government.

Earlier, the minister informed the US delegation about the successful passage of federal budget 2013-14.

He said the government, this year, has enhanced the allocations for Public Sector Development Programme to Rs1.155 trillion besides enhancing the allocations of Income Support Programme from Rs40 billion to Rs70 billion.

Dar urged the Opic to bring into investment of private companies in Pakistan's energy sector. He assured the US delegation that Pakistan was a safe as well as lucrative country for investment and provides a conducive atmosphere for foreign investors.

Addressing the press conference, Elizabeth Littlefield said the investment through Opic into Pakistan has increased from $80 million to $300 million, witnessing manifold increase during past couple of years.

She said that Pakistan was facing some challenges. She, however, expressed the optimism that the new government would overcome all these challenges and lead the country towards better future.

Littlefield said her country will enhance cooperation with Pakistan in power generation through wind and bio-gas, besides enhancing technical cooperation to increase power generation through alternative ways.

She said that the US companies have already been involved in development of energy sector of Pakistan as a 50 megawatt electricity project by an American firm was continuing in Sindh province.

Earlier, while briefing the finance minister and his delegation about the operations of the Opic, she said the corporation mobilises private capital to help solve critical development challenges.

The Opic works with the US private sector and helps businesses gain footholds in emerging markets, catalysing revenues, jobs and growth opportunities both at home and abroad.

The corporation achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds, she added.


http://dawn.com/news/1029436/pakistan-us-to-enhance-cooperation-in-energy-sector

Riaz Haq said...

Here's a PakistanToday report on expected addition of nuclear power plants by 2016:

Completion of the Chashma Nuclear Power Plants CHASNUPP-III and CHASNUPP-IV by 2016, 340 megawatts (MW) respectively, will help meet the target of the Pakistan Atomic Energy Commission (PAEC) for generating 8,800 MW by the year 2030 via nuclear power reactors. The plants reactors and other facilities are being built and operated by the PAEC with Chinese support. In November 2006, the International Atomic Energy Agency (IAEA) approved an agreement with the PAEC for new nuclear power plants to be built in the country with Chinese assistance. The 35-member board of governors of the IAEA unanimously approved the safeguards agreement for any future nuclear power plants that Pakistan would construct. According to official sources, the allocation of budget for the PAEC for the financial year 2013-14.is estimated at around Rs49,512.186 million "An amount of Rs34.6 billion has been set aside for Chashma nuclear power plants C3 and C4. The total cost of these two projects is Rs190 billion which will be partially funded by a Rs136 billion Chinese loan,” an official said. The government has so far spent 62.4 billion on the mega-project having a 660 MW generation capacity. With an additional spending of 34.6 billion, the government has already completed almost half of the work, the official said. The 300 MW Chashma nuclear power plant-I is a pressurized water reactor that began commercial operation in 2000.It is located at Kundian in Punjab while the 300 MW Chashma Nuclear PowerPlant-II is part of the Chashma Nuclear Power Complex in the north-western region of Thal Doab. On April 28, 2009 a general engineering and design contract for CHASNUPP-3 and CHASNUPP-4 was signed with Shanghai Nuclear Engineering Research and Design Institute (SNERDI)...

http://www.pakistantoday.com.pk/2013/07/17/news/profit/680mw-nuclear-plants-to-start-generating-power-by-2016/

Riaz Haq said...

Here's an ET story on pricing of domestic shale gas in Pakistan:


Pakistan Petroleum Limited (PPL) and Italy’s Eni have calculated that the price of shale gas should be $14 per million British thermal units (mmbtu), which has been rejected by the government as too much for the country’s existing tariff regime to absorb, an official told The Express Tribune.
The price was determined on the basis of expenditure required to drill for hard-to-reach shale gas reservoirs following a rise in interest in tapping this potential on the back of reports that Pakistan has massive reserves.
“There has to be a steady transition from conventional gas to tight and then finally to shale gas,” said Moin Raza Khan, Deputy Managing Director of PPL and head of its exploration operation. “This has to be a slow process because of the economics involved in the operations.”

Almost all the 4,000 million cubic feet per day (mmcfd) of gas produced in Pakistan comes from conventional gas fields, which can be reached relatively easily. Tight gas is trapped in impermeable rocks whereas gas trapped in shale formation is called shale gas.
Average consumer gas price is around $4 per mmbtu, undermining the prospects for shale gas to be brought into the system at this stage, Khan said.
“One reason why the US produces shale gas in abundance is because of the economies of scale. We would have to do that to make it feasible and this can’t happen overnight,” he said.

So for the time being exploration firms including PPL are focusing on tight gas, for which the government has increased the price by 40% through a separate petroleum policy.
First tight gas flows entered the transmission and distribution system in June this year as production of 15 mmcfd started from Kirthar block, which is a joint venture between a Polish firm and PPL.
Sui dilemma
For more than 57 years, Sui gas field fuelled the economy, so much that natural gas became synonymous with Sui gas. And now it has depleted.
“If you ask me I think the gas pressure will sustain for another 10 to 12 years,” Khan said. “The pressure used to be 1,300 psi (pounds per square inch), which has come down to only 300 psi.”
To tackle that problem, the company regularly installs compressor plants on the wells to maintain the pressure. “We are considering installing equipment for 100 psi and even 50 psi.”
Offshore expedition
PPL along with its local and foreign partners plans to drill a well in offshore Block-G in the Indus, the world’s second largest delta after the Bay of Bengal.
“Having a discovery offshore is very important,” he said, referring to the successive past failures. “So far, 13 wells have been drilled in Indus. Gas was found only in one and that wasn’t commercially feasible to take out.”
Pakistan has a coastline spread over 1,990 km and sub-divided into Indus and Makran deltas. Indus delta alone is spread over 1.1 million square kilometres. Pakistan’s area covers over 240,000 sq km of this....


http://tribune.com.pk/story/577736/too-hot-to-handle-govt-rejects-shale-gas-price-terming-it-too-much-to-absorb/

Riaz Haq said...

Privately-held KESC has devised a collective reward and punishment scheme to deal with dead-beats and thieves in Karachi. Areas where there is 90% money recovery see almost zero load shedding, 80% get a couple of hours of power cuts and those with less than 50% endure very long hours of black-outs. http://www.gulf-times.com/pakistan/186/details/358456/pakistan-utility-company-fights-to-power-karachi

HopeWins Junior said...

^^RH: "...those with less than 50% endure very long hours of black-outs.... "
----

So the 50% of the people who DO pay their bills (innocent) will now suffer because of the other 50% in their area (guilty) who do not.

Conversely, in the other area, the 10% of people who do NOT pay their bills (guilty) will BENEFIT because of the other 90% (innocent) in their area who do pay.

Yes? Is this the plan? And if so, how will this help? Won't the 50% who do not pay in the "bad area" all just wait for some other to start to pay so that they come up to the 90% mark of payments and then themselves continue to get free electricity?

Is this likely to work?

Why not do what every other country does-- if someone does not pay, cut-off that person's power only.

Riaz Haq said...

HWJ: "So the 50% of the people who DO pay their bills (innocent) will now suffer because of the other 50% in their area (guilty) who do not.
Conversely, in the other area, the 10% of people who do NOT pay their bills (guilty) will BENEFIT because of the other 90% (innocent) in their area who do pay."

That's how the system of collective reward and punishment works where it's hard to hold individuals accountable.

The bottom line is that KESC has succeeded in reducing its unpaid power losses from 40% to 28% after implementing this policy.

Riaz Haq said...

Here's a News report on Chinese investment offer in solar energy in Pakistan:

A Chinese company is ready to create a special solar fund worth three billion dollars in China to support Pakistan in utilising its solar energy resources. The company has the capacity to establish a solar plant of 1000MW in 6 to 8 months in Pakistan, while 50MW to 100 MW solar energy can be produced in 120 days only.

The offer came from Byron Shi Min Chen, president of Lightening Africa, China and Shah Faisal, CEO of Gulf Power Pakistan who called on chairman of Board of Investment (BOI), Mohammad Zubair on Thursday. Imran Afzal Cheema, secretary of BOI, also attended the meeting.

Byron apprised the BOI chief that the company was offering two kinds of solutions to energy crisis through the solar systems. He said that off-grid solar systems could be provided by the company immediately. These ready-to-use systems can be installed and end users may easily meet the electricity demand.

The company may also collaborate with the distribution networks through banks or the dominating relevant companies to sell solar products to households.

On grid solar system, Byron said, can also be installed.

He further said that the tariff should be determined even before inviting the Chinese investors to the country in power sector.

Zubair stated the BOI is mandated to play an important role in the administration and implementation of the government’s foreign direct investment policy. It has a strong record of actively encouraging the flow of FDI into the country through speedy and transparent processing of applications, SEZ Act, and investment policy and strategy.

“We welcome investors to make their businesses a success in the most lucrative investment destination of the world – Pakistan,” he said.

‘The energy policy of Pakistan focuses on the alternate energy, including solar energy. The potential of solar is in the range of 7 to 7.5kwh/msq./day in most of Balochistan, 6 to 6.5 kwh/msq./day in most of Sindh, Southern Punjab and Gilgit-Baltistan, and 5.5 to 6 kwh/msq./day in the rest of the country, he added.

Lightening Africa International, Byron explained in the meeting, is dedicated to solar energy market development in Africa.


http://www.thenews.com.pk/Todays-News-3-192281-China-to-create-$3-billion-solar-fund-for-Pakistan

Riaz Haq said...

Here's an ET report about a Canadian exploration company exiting Pakistan:

Canadian oil and gas exploration firm Niko Resources (Pakistan) Limited (NRPL) has decided to pack up and quit Pakistan apparently because of low wellhead gas prices that make it difficult to sustain operations.
NRPL, a subsidiary of Canada’s Niko Resources Limited, was exploring hydrocarbons in four offshore blocks in Indus namely Indus-X, Indus-Y, Indus-Z and Indus North. The company has collected 2,000 square kilometres of 3-D seismic data in these blocks.
“Now, Niko Resources has served a notice, announcing its decision to quit these four blocks and wind up the company in Pakistan,” an official said.
Niko is a Calgary-based independent international oil and gas company with operations in India, Bangladesh, Indonesia, Kurdistan, Trinidad, Madagascar and Pakistan.
It is one of the fastest growing companies in the industry with market capitalisation of over $5 billion in the Toronto Stock Exchange under the symbol NKO. The government of Pakistan had awarded the four blocks to Niko in March 2008 for offshore drilling.

According to sources, low wellhead gas price for offshore fields was one of the key reasons which forced Niko Resources to stop operations in Pakistan.
“Drilling of an onshore well requires expenditure of $15 million whereas an offshore well needs spending of $80 to $100 million,” a source said, adding exploration companies working on offshore fields had been demanding more incentives to make drilling for oil and gas economically viable.
Sources revealed that Canadian High Commissioner to Pakistan met Federal Petroleum and Natural Resources Minister Shahid Khaqan Abbasi in the first week of July. During the deliberations, Abbasi asked the high commissioner to persuade Niko Resources to take back its decision of leaving Pakistan as the government “is now offering incentives for offshore drilling.”
In the new Petroleum Policy 2012, the price of gas discovered in the Offshore Shallow Zone will be $7 per million British thermal units (mmbtu), for Offshore Deep Zone the price will be $8 per mmbtu and for Offshore Ultra Deep Zone the price will be $9 per mmbtu.
A bonanza of $1 per mmbtu has also been announced for the first gas discovery in the offshore field.
Abbasi told the diplomat that Pakistan had huge reserves of natural resources and there were ample opportunities for investment in the oil, gas and mineral sectors. “We welcome Canadian investment and technical support in the oil and gas sector in Pakistan,” he said.
Pakistan has a vast onshore and offshore sedimentary area covering 827,268 square kilometres, of which around 30% is being explored.
Owing to existing opportunities, transparent and predictable policies and presence of major international exploration firms like ENI and BHP, there is vast potential of investment in Pakistan, Abbasi said.


http://tribune.com.pk/story/582361/calling-it-a-day-canadian-oil-and-gas-firm-decides-to-quit-pakistan/

Riaz Haq said...

Here's a link to Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) detailing facts and data on activities in Pakistan:

http://www.ppepca.com/facts&links.html

Riaz Haq said...

Here's a report on rising remittances to Pakistan from overseas Pakistanis:

ISLAMABAD, July 14 (KUNA) -- An increase of USD 733.64 million in the remittance of overseas Pakistani was observed by the State Bank of Pakistan (SBP) in the last fiscal year (July 2012-June 2013).
Overseas Pakistanis remitted an amount of USD13,920.26 million during the last fiscal year showing a growth of 5.56 per cent or USD733.64 million compared with USD13,186.62 million received during the same period of the last fiscal year (July- June 2012), State Bank of Pakistan said.
The inflow of remittances during July-June 2013 from Saudi Arabia, UAE, USA, UK, GCC countries (including Bahrain, Kuwait, Qatar and Oman) and EU countries amounted to USD4,104.73 million, USD2,750.17 million, USD2,186.21 million, USD1,946.01 million, USD1,607.88 million and USD357.37 million respectively. These amounts could be compared to the inflow of USD3,687.00 million, USD2,848.86 million, USD2,334.47 million, USD1,521.10 million, USD1, 495.00 million and USD364.79 million respectively in July-June 2012.
According to State Bank, remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the last fiscal year (July-June 2013) amounted to USD967.79 million as against USD935.36 million received in the last fiscal year (July- June 2012). The monthly average remittances for July-June 2013 period comes out to USD1,160.02 million compared to USD1,098.89 million during the corresponding period of the last fiscal year, said the SBP.


http://www.kuna.net.kw/ArticleDetails.aspx?id=2322337&language=en

Riaz Haq said...

Here are a couple of news items on Pakistani imports in 2012-13:
Dawn:
Statistics showed the oil import bill reached $13.937 billion in July-May this year as against $10.467 billion over the last year, indicating an increase of 33.15 per cent.
http://beta.dawn.com/news/728216/import-bill-increases
Daily Times:
The country has suffered $20.432 billion trade deficit during last fiscal year 2012-13, according to the official figures released by Pakistan Bureau of Statistics on Friday.
July to June: The exports from Pakistan during last 12 months of the last fiscal year 2012-13 were recorded at $24.518 billion as compared with exports of $23.624 billion in the same period of previous fiscal year 2011-12, projecting an increase of 3.76 percent.
http://www.dailytimes.com.pk/default.asp?page=2013%5C07%5C13%5Cstor...

Riaz Haq said...

Here's a CNBC report on Prince Walid Bin Talal's concern about growing shale oil and gas hurting Saudi economy:

Saudi billionaire Prince Alwaleed bin Talal warned that the Gulf Arab kingdom needed to reduce its reliance on crude oil and diversify its revenues, as rising U.S. shale energy supplies cut global demand for its oil.

In an open letter to Oil Minister Ali al-Naimi and other ministers, published on Sunday via his Twitter account, Prince Alwaleed said demand for oil from OPEC member states was "in continuous decline".

He said Saudi Arabia's heavy dependence on oil was "a truth that has really become a source of worry for many", and that the world's biggest crude oil exporter should implement "swift measures" to diversify its economy.

(Read more: Oil prices jump as US crude takes bigger role on world oil stage)

Prince Alwaleed, owner of international investment firm Kingdom Holding, is unusually outspoken for a top Saudi businessman.

But his warning reflects growing concern in private among many Saudis about the long-term impact of shale technology, which is allowing the United States and Canada to tap unconventional oil deposits which they could not reach just a few years ago. Some analysts think this may push demand for Saudi oil, as well as global oil prices, down sharply over the next decade.

Over the past couple of years the Saudi government has taken some initial steps to develop the economy beyond oil - for example, liberalising the aviation sector and providing finance to small, entrepreneurial firms in the services and technology sectors.

Nowhere Is Immune from Unrest: Saudi Prince
Saudi Prince Alwaleed Bin Talal, talks to CNBC about turmoil in the Middle-East and the price of oil.
Naimi said publicly in Vienna in May that he was not concerned about rising U.S. shale oil supplies. Prince Alwaleed told Naimi in his open letter, which was dated May 13 this year, that he disagreed with him.
"Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92 percent of the budget for this year depends on oil," Prince Alwaleed said.

(Read more: Don't mess with West Texas: US oil to keep outpacing Brent)

"It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately," he said, adding that the country should move ahead with plans for nuclear and solar energy production to cut local consumption of oil.

The shale oil threat means Saudi Arabia will not be able to raise its production capacity to 15 million barrels of oil per day, Prince Alwaleed argued. Current capacity is about 12.5 million bpd; a few years ago the country planned to increase capacity to 15 million bpd, but then put the plan on hold after the global financial crisis.

While most Saudi officials have in public insisted they are not worried by the shale threat, the Organization of the Petroleum Exporting Countries (OPEC) has recognised that it needs to address the issue.

(Read more: OPEC ministers: falling demand is our top concern)

In a report this month, OPEC forecast demand for its oil in 2014 would average 29.61 million bpd, down 250,000 bpd from 2013. It cited rising non-OPEC supply, especially from the United States.

At its last meeting in Vienna in May, OPEC oil ministers spent time discussing shale technology and set up a committee to study it.


http://www.cnbc.com/id/100920411

Riaz Haq said...

Here's a Daily Times on oil and gas drilling in 2012-13 in Pakistan:

Exploration and production drilling activities in financial year (FY) 2012-13 was the highest-ever development drilling in Pakistan as total 62 wells were drilled, up 82 percent on yearly basis, analysts said on Tuesday.
Meanwhile target of 105 wells for FY 2013-14 is modest and leaves room for improvement, said Fawad khan an analyst at Foundation Securities.
Pakistan has achieved highest-ever development drilling with total 62 wells in FY 2012-13, registering 82 percent yearly increase. The sharp pickup in activity is driven primarily by private sector and should lead to modest increase in production, as most of the drilling is concentrated in low-yielding wells in Badin.
United Energy Group (UEG-Chinese exploration and production giant)) has emerged as the largest contributor to Pakistan drilling programme with over 43 percent drilling in FY 2012-13. Once again stratigraphic traps in Badin received huge focus on exploration. UEG efforts to unlock the potential in Badin block and new exploration leases are bearing fruits out of 17 exploration wells, UEG found hydrocarbons in at least 12 wells.
Oil and Gas Development Corporation (OGDC) and Pakistan Petroleum Limited (PPL) are yet to touch their full potential on drilling activity. OGDC has drilled only 24 wells in FY 2012-13, up 41 percent on yearly basis, but still below start of the year drilling target of 29 wells.
Khan said available details on FY 2013-14 drilling suggest both PPL and OGDC have not set significantly higher drilling target. Total industry drilling target is set at 105 wells like FY 2012-13. UEG will lead drilling with 55-60 wells drilling programme.
Ongoing exploration in high profile Zin block (OGDC), exploration drilling in Tal at Kot (particularly POL) and complete results on exploration wells in Gambat South (PPL) can bring significant reserve and production upside.
A number of important development projects are slated to come online during FY 2013-14, which are important for materialisation of overall earnings and production targets.
Khan particularly highlighted the Gas Processing Facility at Makori, development drilling in Makori East and Nashpa and progress on second phase production ramp-up on Kunnar Pasakhi Deep (KPD) field.
He estimated FY 2013-14 earnings growth for OGDC, PPL and POL of 36 percent, 28 percent and 32 percent driven by 15 percent, 6 percent and 11 percent volume growth respectively.
Despite a swift bidding round for 60 exploration leases following approval of 2012 E&P policy, actual award of leases has faced certain regulatory hiccups in certain cases. This can potentially delay the impact of new policy on drilling programme, which typically takes at least three years to materialise. Just to recap, 2012 policy offered 26percent, 100 percent higher oil/gas prices over 2001 policy pricing.
Government initially offered attractive conversion terms for areas under previous policies but later on changed certain conditions. Through award of 57 blocks, the government received minimum work commitment of $372 million.


http://www.dailytimes.com.pk/default.asp?page=2013%5C07%5C17%5Cstory_17-7-2013_pg5_2

Riaz Haq said...

Net FDI in Pakistan up 76% from 2011-12 to 2012-13:

Net foreign direct investment into Pakistan rose 76 percent in the fiscal year 2012-13, which ended in June, reaching $1.447 billion compared to previous year, according to data from the State Bank of Pakistan.
Between July and June, there was an inflow of $2.653 billion and outflow of $1.205 billion, according to the central bank. In the same period the year earlier, there was an inflow of $2.099 billion and outflow of $1.278 billion.
During June this year, net foreign direct investment rose to $128 million compared to $56 million a year earlier.


http://www.dailytimes.com.pk/default.asp?page=2013\07\17\story_17-7-2013_pg5_3

Riaz Haq said...

Here's Daily Times on a TRL refinery planned for Pakistan:

KARACHI: Trans-Asia Refinery Ltd (TRL) has made a major announcement expressing its ‘total commitment’ to building the most complex refinery in Pakistan, producing more than 100,000 barrels a day and 4.0 million tonnes of petroleum products every year. The refinery will be located at Port Qasim, Karachi.
In a major boost to the country’s economy, TRL signalled the end of previous delays with an undertaking that ‘the investors have decided to push the project forward in the interests of all parties and the people of Pakistan’.
TRL’s determination to see the project through to completion is demonstrated by two important initiatives announced yesterday. First is the appointment of Descon to undertake a complete ‘health check’ inspection of the TRL refining equipment. The second is a newly-completed restructuring of TRL management to ensure the project proceeds with all possible haste.
TRL CEO Sultan Al Ghurair said he was delighted to have Descon on board in order to develop the project further. Descon is the leading engineering and construction company of Pakistan. The company said that, since the refinery had been delayed for some time, they will perform a health check of critical equipment before the EPC contractor is finalised.
The TRL project is a direct investment of Al-Ghurair Investment LLC, a UAE-based family conglomerate and one of the most diverse industrial groups in the Middle East. As the majority shareholder, Al Ghurair will play an important role in the future supply of fuel to the nation of Pakistan.
When completed, the TRL Refinery will annually produce 80,000 tonnes of LPG, 455,000 tonnes of Naphtha, 410,000 tonnes of motor gasoline, 422,000 tonnes of jet fuel, 1,000,000 tonnes of gas oil – from which 630,000 tonnes will be treated diesel – 1,050,000 tonnes of fuel oil and 200,000 tonnes of bitumen. All the products of the refinery are in high demand in Pakistan.
The TRL refinery will create at least 350 direct jobs and several thousand indirect job opportunities for Pakistani workers. Ghurair said: “Our parent company and major shareholder, Al Ghurair Investment LLC, has always been about creating long-lasting relationships - and TRL is committed to carrying on that tradition. Al Ghurair looks forward to playing a part in the future prosperity of Pakistan and its people - and the TRL refinery is proof of that commitment.”


http://www.dailytimes.com.pk/default.asp?page=2013%5C08%5C07%5Cstory_7-8-2013_pg5_7

Riaz Haq said...

Here's a China Daily report on what China can learn from US shale energy development:

WASHINGTON -- The surging shale energy output in recent years has been centering in North America, but it can also happen in other places like China, a US energy expert said Friday.
Shale gas will come to play a more important role in China's energy mix in the long term, said IHS Cambridge Energy Research Associates Chairman Daniel Yergin at a seminar on energy boom in North America.
"China has great potential for shale gas but it will take perhaps five to 10 years to develop, due to the lack of infrastructure and logistic capabilities," Yergin told Xinhua.
He added that Chinese energy companies among others are learning the necessary technologies from their American counterparts to unlock the unconventional energy including shale oil and gas.
The energy industry was concerned a decade ago that US energy output had hit the ceiling and started to go down, but now the United States is about to overtake Russia in terms of oil and gas production, said Yergin.
The United States produced the equivalent of 22 million barrels a day of oil, natural gas and related fuels in July, according to figures from the Energy Department.
The shale energy bonanza reduced US imports of natural gas and crude oil by 32 percent and 15 percent respectively in the past five years.
However, the environmental implications of shale gas extraction, a process that includes hydraulic fracturing, remain uncertain.
Hydraulic fracturing involves pumping water, sand and chemicals deep underground into horizontal gas wells at high pressure to crack open hydrocarbon-rich shale and extract natural gas.
Accelerated shale gas drilling and hydrofracking in recent years has fueled concerns about contamination in nearby drinking water supplies.


http://usa.chinadaily.com.cn/business/2013-10/12/content_17027019.htm

Riaz Haq said...

I heard a BBC report on energy-rich Nigeria's blackouts being far worse than Pakistan's. With roughly the same population as Nigeria's, Pakistan generates 5 times as much electric power as Nigeria.

http://www.bbc.co.uk/news/magazine-24641409

Riaz Haq said...

Here's an AFP story on coal power for Pakistan:

....Late last month, Prime Minister Nawaz Sharif and his former rival, ex-president Asif Ali Zardari jointly inaugurated the construction of a $1.6 billion coal plant the southern town of Thar, hailing their shared goal of ending the nation’s power crisis. The government has also green-lighted the construction of a pilot 660 megawatt coal-fired plant in Gadani, a small, serene town on the Arabian Sea known as Pakistan’s ship-breaking hub. A 600 megawatt plant has also been given the go-ahead in the southern city of Jamshoro......
“This is a major and historic fuel switching plan as we generate zero from coal compared to India which generates 69 percent of its electricity from coal-fired power plants,” Pakistan’s minister for power and water Khwaja Asif told AFP.

Pakistan has struggled with scheduled power cuts for decades. But the problems have been particularly acute since 2008, with regular outages of up to 22 hours a day for many domestic users and even longer for industries — costing about two percent of GDP per year.
In the hot summer, when temperatures soar to 50C in the country’s centre, Pakistan produces around 18,000 MW of power, with an average deficit of 4,000 MW. A lack of capacity together with huge debt cycles exacerbated by poor rates of tax collection are seen as some of the major factors contributing to the country’s dismal power shortages.
The issue was also a central campaign theme in last year’s general elections, which saw Nawaz Sharif elected to the top post. Faced with a growing bill for imported oil that currently stands at $14 billion and a rapidly depleting supply of natural gas, the country’s private and public plants are switching their oil-plants over to coal. “Pakistan has been facing rising oil prices and declining gas reserves as well as tight foreign account situation, rendering the reliance on the import of oil to fuel power plants increasingly unaffordable,” the Asian Development Bank said in a statement. Pakistan’s largest private sector power utility Karachi Electric Supply Company (KESC), which provides electricity to the country’s biggest city, has taken the lead in plans for the coal switch.
The company has recently granted engineering, procurement and construction contracts to Chinese company Harbin Electric International to convert two units of the Bin Qasim thermal power stations with 420 megawatt capacity.
The $400 million project is expected to be completed by 2016. Alongside the conversions, Pakistan is also upgrading its port facilities to increase its ability to import coal.
“Ports are the lifeline of the country,” says Haleem Siddiqui, a veteran seaman who pioneered the first state-of-the art container terminal at Karachi Port and whose company is building a “dirty cargo terminal” at Port Qasim along Arabian Sea.
The fully-mechanised terminal would be able to handle four to eight million tons of coal in the first phase to be completed by 2015, growing to 20 million tons in the extended phase in 2020, at a cost of $200 million.

----- Which is why Pakistan is determined to find some of its energy needs under its own soil. Some experts have pointed to the Thar Desert in southern Sindh province, which sits on top a vast potential source of 175 billion tons of coal.
“It is very huge reserve and is equivalent to combined oil reserves of Iran and Saudi Arab in terms of heating value,” Agha Wasif, chief of the provincial energy department told AFP. Engro Powergen Limited, a joint venture of public and private sectors, is developing a block of the Thar coal field with $800 million dollars investment which is set to open by 2016....


http://www.nation.com.pk/business/20-Feb-2014/energy-starved-pakistan-sets-sights-on-coal

Riaz Haq said...

LONDON (Alliance News) - Oracle Coalfields PLC Thursday said it has signed a engineering procurement and construction agreement in Beijing with SEPCO Electric Power Construction Corp for the construction of an integrated coal mine and power plant.


SEPCO is a power and construction group in China.

Oracle Coalfields, which is a developer of a lignite coal mine located in the south eastern Sindh Province in Pakistan, said the construction of the integrated coal mine and power plant is a major milestone in the development of the Block VI project in the Thar Coalfields.

Through its local coal mining subsidiary Sindh Carbon Energy Ltd, Oracle owns the mining lease for Block VI in Thar Coalfield, for the mining of lignite coal. Oracle plans to develop the mine and to sell coal to a new created company, provisionally called Electric Power Ltd, at an integrated power station next to the mine.

Oracle said that SEPCO has also proposed a financing structure to potentially securitise up to 85% of the cost of the two EPC contracts, which would be provided by Sinosure, the China Export & Credit Insurance Corp, and some Chinese banks.

The EPC contract is for a 4.2 million tonnes per year coal mine and the 600 megawatt power plant.

The combined EPC transaction value is around USD1.3 billion, Oracle said.

The EPC framework agreement confirms SEPCO's intention to purchase minority equity interests in Electric Power and to potentially make an investment in Sindh Carbon Energy Ltd, Oracle said.

"Entering the EPC Framework Agreement with and receiving a financing proposal from one of China's largest state-owned enterprises in the energy sector is another step towards bringing the project to reality. Both SEPCO and Oracle are eager to succeed in the development of our integrated coal mine and power plant project and to play an effective role in addressing Pakistan's energy crisis," said Oracle Chief Executive Shahrukh Khan in a statement.

http://www.lse.co.uk/AllNews.asp?code=2mspz9ic&headline=Oracle_Coalfields_Inks_Pakistan_Framework_Deal_With_Chinas_SEPCO

Riaz Haq said...

The cash starved government spent huge amount of $7.697 billion on oil imports in just six months (July-December) of the current financial year (2012-2013) as petroleum products’ demand increased owing to loadshedding of CNG throughout the country.
Analysts said that severe energy crisis in the country and lower capacity operations of refineries pushed the oil import bill upwards. They said that rise in imports of finished products was due to high demand for energy generation. They further said that oil import bill might further increase in December and January. According to the figures of Pakistan Bureau of Statistics (PBS), the country’s petroleum products import has shown an increase of 1.15 per cent in one year, as it imported oil worth of $7.697 billion in July-December of the ongoing financial year against $7.610 billion of July-December of the last year 2011-2012.
Analysts said that the country should ensure energy supply through own resources; otherwise the oil import bill would affect the country’s fiscal position. “As gas supply situation in the country is not expected to improve in the near future, the oil import bill will continue to mount pressure both on value and volumetric basis,” an analyst said.
The break-up of $7.697 billion oil import bill revealed that country spent $4.920 billion on petroleum products and $2.777 billion on import on petroleum crude during the first six months of ongoing financial year.
The PBS figures revealed that country imported food stuff worth of $2.157 billion during July-December of the year 2012-13. The break-up of $2.157 billion revealed that import bill of milk products was up by 3.20 per cent, dry fruits and nuts 1.02pc, import of tea increased by 6.46 per cent, import of spices decreased by 30.06 per cent, soyabean oil’s imports went up by 26.47 per cent, palm oil import decreased by 18.92 per cent, sugar import declined by 78 per cent, import of pulses went down by 12.76 per cent and import of all other food items decreased by 24.80 per cent during the period under review.
Meanwhile, according to PBS figures, the country imported machinery worth of $2.907 billion. Transport group imports stood at $951 million, textile group $1.115 billion, agricultural and other chemicals $3.136 billion, metal group $1.529 billion, miscellaneous group imports were recorded at $402 million and all other items imports remained $ 2.026 billion during July-December period of 2012-13 against July-December period of 2011-12.
It is worth mentioning here that Pakistan’s overall imports were recorded to $21.922 billion in July-December period of ongoing financial year as compared to $22.678 billion of the corresponding period last year.

http://nation.com.pk/business/23-Jan-2013/oil-import-bill-surges-to-7-697b-in-6-months

Riaz Haq said...

Highlighting various activities, HP Cogen-Pak Project Director Omar Malik said the programme is currently working in collaboration with 35 sugar, 14 financial institutions and five technology providers, while seven bankable feasibility studies are already under way. Assessment for the pipeline and capacity building of Pakistani boiler manufacturers is also expected to start in December this year.
While talking to The Express Tribune, Malik said that it is to promote sustainable production of energy for export of surplus electrical power to the national grid through replication of existing technologies in the sugar sector.
“We are also trying to mobilise relevant public sector authorities for the formulation of a regulatory regime for bagasse based power projects,” he said. “Training of technical staff of sugar mills on standardised design and technology selection is also part of the process.”
The event was attended by representatives of the Ministry of Water and Power, National Electric Power Regulatory Authority, Private Power Infrastructure Board, Alternative Energy Development Board, State Bank of Pakistan, Climate Change Division, Pakistani boiler manufacturers and sugar mill representatives.
Pakistan’s sugar sector has an annual availability of 4.4 million metric tons of bagasse, sugar mill waste.
To generate heat and electricity for its energy needs, sugar sector is using inefficient low pressure cogeneration system, consuming 46% more bagasse compared to the High Pressure Cogeneration.

http://tribune.com.pk/story/783866/boiler-technology-sweet-way-for-sugar-sector-promotion/

Riaz Haq said...

#Austrian company OMV finds new gas reserves in #Sindh #Pakistan http://tribune.com.pk/story/972132/austrian-company-finds-gas-reserves-in-sindh/ …

Austrian oil and gas company, OMV, claimed to have discovered new gas reserves at the Latif exploration block in Sindh, a press release issued by the company stated.

The Latif South-1 well had a gas throughput of 2,500 barrels of oil equivalent (boe) a day during testing, the company said in a statement.

“We are very pleased with this exploration success. The appraisal and development of this discovery will potentially enable us to enhance the production in Pakistan,” OMV Executive Board Member responsible for Upstream, Johann Pleininger, said.

Read: Iran has not much gas for sale, Pakistan must act swiftly

The company also said that the Latif South-1 well had a gas throughput of 2,500 barrels of oil equivalent a day during testing.

“This discovery has opened up new exploration opportunities in the area,” the company said, adding that “further appraisal work is needed to confirm the size of the discovery.”

OMV’s global production was 309,000 boe a day last year, the company, which has a 33.4 per cent stake in the Latif exploration licence, said. Its partners are Pakistan Petroleum Ltd (PPL) and Italian energy group Eni, which hold 33.3 per cent each.

OMV Pakistan, a wholly-owned subsidiary of OMV Exploration & Production GmbH, started exploration activities in the desert area of Sindh in 1991 and is amongst the largest international natural gas producers in Pakistan in terms of operated volumes.

As a key investor in the oil and gas sector in the region, OMV also holds a 10% stake in Pak-Arab Refinery Limited (PARCO), a joint venture between Pakistan and Abu Dhabi.

Pakistan is currently pursuing two major projects of gas import, including the Iran-Pakistan (IP) pipeline project, which will supply 750 million cubic feet of gas per day (mmcfd) to Pakistan and the volume will be enough to generate 5,000MW of electricity.

Read: After nuclear deal, Pakistan and Iran seek to increase trade

Pakistan faces over 7,000-megawatt power shortfall in the peak summer season that causes blackouts in many areas and cripples life and business. Estimates suggest that the energy shortage strikes 3% off economic growth every year.

In addition to electricity shortages, the country endures gas scarcity that reaches its peak in winter when even domestic consumers are left scrambling for the vital heating and cooking fuel.

Riaz Haq said...

#Pakistan confirms it has 105 trillion cubic ft #shale gas, 58 billion barrels of shale oil reserves #energy http://www.dawn.com/news/1220955

Pakistan has confirmed recoverable reserves of around 200 trillion cubic feet (TCF) of natural gas and around 58 billion barrels of oil in its shale structure — many times larger than existing conventional gas reserves of around 20 TCF and 385 million barrels of oil.

This was stated by Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi at a press conference held here on Thursday to explain main findings of a recently concluded Shale Gas Study based on actual data of existing wells.

“The conclusion (of the study) is that Pakistan has huge potential of shale gas and oil which is much bigger than previous estimates of the United States Energy Information Administration (USEIA) and technology is available at home to produce this resource,” he said.

Also read: Oil and gas reserves found in Mianwali

Mr Abbasi said the country had a massive potential of 10,159 TCF shale gas and 2.3tr barrels of oil. He said the USEIA had reported in April 2011 the presence of 206 TCF shale gas in lower Indus Basin out of which 51 TCF was termed technically recoverable.

However, in June 2013 the USEIA revised the shale gas resource in Pakistan at 586 TCF in place out of which 105 TCF was tipped as risked technically recoverable and also included 9.1bn barrels of shale oil risked technically recoverable out of 227bn barrels shale oil in place.

He said a shale gas study initiated in January 2014 with the support of USAID had been completed. It proved that Pakistan had 10,159 TCF of shale gas resource and 2,323bn barrels of shale oil.

He said the findings were reached when recoverable data of 1,611 wells were collected and shale formation of 1,312 wells through drill was examined. The study covered lower and middle Indus Basin, geographically spread over Sindh, southern Punjab and eastern Balochistan. He said 70 per cent of wells data were used to develop the study.

The minister said the samples were sent to New Tech Laboratory in Houston to verify shale gas and oil resource in place. The study confirmed that Pakistan had the potential of shale gas and oil which was more than expectations.

He said Pakistan had the technology for exploring conventional oil and gas that could be used for exploiting shale oil and gas. However, the country requires more technology for exploiting shale oil and gas resource on a larger scale. He said that real challenges were environmental issues, availability of water and higher cost of drilling. He said one well required 3-8m barrels of water.

Shale gas will cost $10 per Million British Thermal Unit. “We have assigned OGDCL and PPL to explore shale gas and oil from one well to determine cost of extracting them.”

Responding to a question, Mr Abbasi said the natural gas would be available only for domestic consumers in Punjab and even they would not get it between 10pm and 5am. The demand of gas in domestic sector in Punjab is about 950mmcfd, but supplies will be around 650 mmcfd and the difference would need to be met through pressure management.

He said the power plants and fertiliser units would be run on LNG. “CNG sector may also get LNG if supply is available,” he said, adding that captive power plants would also be switched to LNG.

In reply to another question, he said a transparent process had been followed in awarding LNG contract and all required information and record were provided to the National Accountability Bureau. “I have been engaged personally in process of LNG and, therefore, take full responsibility and am available for any questioning or accountability,” he said.

He said that a summary had also been moved to the Council of Common Interests to approve regulation of LPG prices to provide relief to consumers but the CCI had not met for 10 months.

Riaz Haq said...

#Pakistan has 10,159 trillion cubic feet of #shale gas & 3.2 trillion barrels of shale oil reserves: #USAID #energy http://tribune.com.pk/story/994883/hydrocarbon-presence-pakistan-has-10159-tcf-of-shale-gas-deposits-usaid/ …

Pakistan has massive deposits of 10,159 trillion cubic feet (tcf) of shale gas and 2.3 trillion barrels of oil – estimates that are several times higher than figures given by the US Energy Information Administration (EIA), reveals a study conducted with the help of US Agency for International Development (USAID).

EIA had reported in April 2011 that 206 tcf of shale gas was present in the lower Indus Basin, of which 51 tcf were technically recoverable.

However, in June 2013, EIA revised the estimate upwards to 586 tcf, of which 105 tcf were tipped as technically recoverable. Apart from gas, EIA also saw the presence of 9.1 billion barrels of shale oil that were technically recoverable out of the estimated deposits of 227 billion barrels.

Speaking at a press conference, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi said the study was undertaken with the support of USAID in January 2014, and was completed in November this year.

He said the study confirmed that Pakistan had 10,159 tcf of shale gas and 2,323 billion barrels of oil reserves.

“Risked technically recoverable resource is 95 trillion cubic feet of shale gas and 14 billion barrels of shale oil,” Abbasi said, adding the data of 1,611 wells had been collected and shale formation of 1,312 wells was done through drilling.

He said 70% of data was used to develop the study and samples were sent to the New Tech laboratory in Houston, US for assessment. “Pakistan has the potential to produce shale gas and oil, which is more than expectations,” he remarked.

Abbasi insisted that the technology in Pakistan for exploring conventional oil and gas deposits could also be used for extracting shale reserves. Still, more technology was required for producing shale oil and gas on a large scale.

He cited environmental issues, provision of water and high cost of drilling as the real challenges. A well requires 3 to 8 million barrels of water.

“We have water but the real issue is its disposal,” he said, adding shale gas would cost $10 per million British thermal units. However, the cost will come down with the increase in recovery of untapped deposits.

He said the world was exploring shale gas and oil and Pakistan also wanted to harness that potential. “We have asked OGDC (Oil and Gas Development Company) and PPL (Pakistan Petroleum Limited) to extract shale gas and oil from a well in order to determine its cost.”

A policy for shale deposits will be formulated after the cost of drilling is determined.


According to Abbasi, Pakistan has 20 trillion cubic feet of conventional gas and 385 million barrels of oil. “Gas is enough to meet the needs for 15 years at the existing pace of production,” he said.

Adviser to Ministry of Petroleum Zaid Muzaffar revealed that OGDC was working on one conventional gas well in a bid to find shale gas and oil. “We hope it will get results in two to three months.”

A well needs $2 to $3 million of additional cost to reach the shale reserves.

Gas supply in winter

Abbasi said gas would be available in Punjab to domestic consumers only and liquefied natural gas (LNG) would be consumed to run power and fertiliser plants.


Compressed natural gas (CNG) stations may get LNG if it was available and captive power plants would also be switched to this fuel, he said.

The minister stressed that the petroleum ministry had followed a transparent process in the award of LNG contract. It has provided all information to the National Accountability Bureau, which has asked for a presentation.

He revealed that the ministry had sent a summary to the Economic Coordination Committee for deregulating oil prices, but it was turned down. “We are looking at the petroleum situation again to assess whether it should be deregulated or not.”

Riaz Haq said...

Drilling of first #shale oil& gas wells starts in #Sindh, #Pakistan: Minister Abbasi | Business Recorder http://www.brecorder.com/fuel-a-energy/193:pakistan/1248354:drilling-of-first-shale-oil-gas-well-starts-in-sindh-abbasi/ …

The state-owned Exploration and Production (E&P) companies; Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL), have started drilling of country''s first ever shale oil/gas well in Sindh. This was stated by Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, who was flanked by State Minister for Petroleum Jam Kamal Khan and Advisor Petroleum Ministry Zahid Muzafar, while addressing a press conference here ion Thursday.

He said that in a new study undertaken by Director General Petroleum Concession (DGPC) with financial support from United States Agency for International Development (USAID) the shale gas revised in place resources of the country stand at 10,159 Trillion Cubic Feet (TCF) against previous estimated resources of 586 TCF. The minister said that out of this an estimated 200 TCF of shale gas resources are recoverable against 105 TCF of previous study.

Advisor Petroleum Ministry Zahid Muzafar, who is also Chairman Board of Directors OGDCL, in response to a question on the completion of first shale oil/gas well of the country said that it would be completed within four to five months and after the completion of first well the government will be in a position to determine wellhead price for shale gas/oil. He added that it would be around $10 per Million British Thermal Unit and on the basis of the pilot project the government will devise shale oil/gas policy to formally invite the local as well as international E&P companies to invest in the sector. Abbasi said that the new study had put the shale oil resources at 2,323 Billions of Stock Tank Barrels (BSTB) of which technically recoverable resources were 58 BSTB and risked technically recoverable resources estimated at 14 BSTB.

----

Talking to reporters on the occasion DGPC Saeedullah Shah said that the US Energy Information Administration (USEIA) in April 2011 reported presence of 206 TCF Shale Gas in Place Resource in Lower Indus Basin out of which 51 TCF were technically recoverable. However, in June 2013, USEIA revised Shale Gas resource in Pakistan as 586 TCF in place out of which 105 TCF were tipped as risked technically recoverable and also included 9.1 Billion Barrel Shale Oil risked technically recoverable resource out of 227 Billion Barrel Shale Oil in place.

The DGPC added that to get authenticate Shale Gas Resources in the country, Shale Gas Study with financial support from USAID was initiated in January 2014. The objectives of the study were to (i) validate Shale Gas Resource estimate of USEIA, (ii) assess availability of required technology and infrastructure for Shale Gas operations and (iii) formulate guidelines for Shale Gas Policy. The study was completed in November 2015 with a total cost of $2.2 millions. The study covered lower and middle Indus basin which geographically spread over Sindh and southern part of Punjab and eastern part of Balochistan province. Total area under the study was 271,700 km, which constitutes 33 percent of total sedimentary area of Pakistan. Under the study, detailed analysis of 124 wells were carried out including laboratory analysis on Shale Cores and Cuttings in USA. The study has confirmed presence of substantial Shale Gas and Shale Oil as under:

In place resource: Free gas (TCF), 3,778, adsorbed gas (TCF), 6,381Total gas (TCF), 10,159 and Oil (BSTB), 2,323 of which technically recoverable resource include free gas 188 TCF and Oil 58 BSTB. Risked technically recoverable resources are free gas 95 TCF and oil 14 BSTB.

Riaz Haq said...

Pak shale gas, oil reserve far higher than past estimate


Pakistan has around 200 trillion cubic feet of recoverable reserve of natural gas and around 58 billion barrels of oil in its shale structure which is higher than estimated previously, Minister for Petroleum and Natural Resources said.
Sharing findings of a recent Shale Gas Study, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said the new data shows that reserves were many times larger than existing conventional gas reserves of around 20 trillion cubic feet (TCF) and 385 million barrels of oil.
A shale gas study initiated in January 2014 with the support of United States Agency for International Development (USAID) had been completed, proving that Pakistan had 10,159 TCF of shale gas resource and 2,323 billion barrels of shale oil.
“The conclusion (of the study) is that Pakistan has huge potential of shale gas and oil which is much bigger than previous estimates of the United States Energy Information Administration (USEIA) and technology is available at home to produce this resource,” he said.
He also said the USEIA had reported in April 2011 the presence of 206 TCF shale gas in lower Indus Basin out of which 51 TCF was termed technically recoverable.
USEIA in June 2013 revised it saying that the shale gas resource was at 586 TCF, out of which 105 TCF was tipped as risked technically recoverable.
It also included 9.1 billion barrels of shale oil risked technically recoverable out of 227 billion barrels shale oil in place.
Abbasi said Pakistan’s conventional oil and gas exploration technology could be used for exploiting shale oil and gas but it still needed more advanced technology for exploiting shale oil and gas resource on a larger scale.
He said that the exploration of shale reserves involves huge cost and two local companies Oil and gas Development Corporation Limited and Pakistan petroleum were asked to explore shale gas and oil from one well to determine the cost.
Once exploited, the new reserves will change the economic landscape of Pakistan, which is suffering massive energy shortages.–PTI

http://www.indiapost.com/pak-shale-gas-oil-reserve-far-higher-than-past-estimate/

Riaz Haq said...

#China consortium to help finance $2 billion #Engro #Thar coal-mining & power generation project in #Sindh #Pakistan http://www.chinadaily.com.cn/business/2015-12/22/content_22771350.htm …

A consortium led by China Machinery Engineering Corp is set to finance a coal-based power plant and a mining project being developed by Engro Corp, a Pakistani firm.

The first phase of the $2 billion project will consist of a coal-based power plant with two 330-megawatt units in Thar Block II in the Sindh province of Pakistan and a coal mining project for power generation.

The project is also part of the cooperation along the China-Pakistan Economic Corridor, which runs about 3,000 kilometers from Gwadar to the northwestern Chinese city of Kashgar, Xinjiang Uygur autonomous region, a part of the ancient Silk Road linking Eurasia and Africa, CMEC said in a statement.

Zhang Chun, president of CMEC, said that it is the first integration project of coal mining and coal-based power plant among the projects in the China-Pakistan Economic Corridor, which is expected to push forward the economic development in Pakistan.

"I think we have opened a new chapter in the overseas market with this project," Zhang said.

"Since our strength lies in foreign engineering project contracting, it will become a model project in Pakistan."

The deal follows President Xi Jinping's state visit to Pakistan in April, when the two sides agreed to set up an economic corridor to bolster China's new trade initiatives-the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Wang Shida, an expert on Afghanistan at the Beijing-based China Institute of Contemporary International Relations, said that the project will help bolster Pakistan's energy supplies, something that has hindered local economic development.

He said Pakistan relies heavily on imported crude oil, diesel and natural gas, with less than 0.1 percent of energy coming from coal-fired power stations, leaving much potential for growth in coal-based power projects.

"The cost is very high due to the reliance on imports. Construction of more coal-powered plants will ease the demand-supply gap in Pakistan," he said.

China has already invested more than $40 billion for development of the China-Pakistan Economic Corridor with energy projects being a major focus including hydropower plants, coal-fired stations and wind farms, experts said.

The signing ceremony also involved financial groups like China Development Bank and Habib Bank Ltd in Pakistan.

Riaz Haq said...

#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.

Riaz Haq said...

#Pakistan’s discoveries add 50 million cubic ft per day (mmcfd) of #gas, 2,359 barrels per day (bpd) of #oil levels.

http://tribune.com.pk/story/1132448/pakistans-oil-gas-discoveries-touch-record/

Pakistan has made the highest number of oil and gas discoveries in the current month as exploration companies found fresh hydrocarbon deposits in six wells that will add 50.1 million cubic feet per day (mmcfd) of gas and 2,359 barrels per day (bpd) of oil to the existing production levels.

Of these, major discoveries have been made in Sindh that already has a big share in total gas output in the country.

Gas utilities: World Bank recommends single transmission firm

Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, while speaking during a meeting of the National Assembly Standing Committee on Petroleum and Natural Resources chaired by Bilal Ahmed Virk on Tuesday, said four discoveries were made in Sindh and the remaining two in Khyber-Pakhtunkhwa.

Of these, Oil and Gas Development Company made two finds, MOL Pakistan two and Petroleum Exploration Limited and United Energy Pakistan one each. The discoveries have shown presence of 31.6 mmcfd of gas and 339 bpd of crude oil in Sindh and 18.5 mmcfd of gas and 2,020 bpd of oil in K-P.

Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Amjad Latif warned that the country’s gas reserves were depleting and no gas was available for the domestic consumers in Punjab. He pointed out that the purchasing cost of gas for domestic consumers stood at Rs510 per million British thermal units (mmbtu) but the consumers coming under the first slab were receiving it at Rs110 per mmbtu.

Eighty-five per cent of domestic consumers were paying less than 50% of the cost of gas and the industrial and commercial consumers were cross-subsiding the domestic consumers, he said.

However, now industrial and commercial consumers were being provided imported liquefied natural gas (LNG), so the burden of cross-subsidy had been shifted to SNGPL that was feeling the strain on its finances.

Though the gas production was declining, Latif told the committee that the company would lay pipelines over 8,000 km in the current year. At present, 1.5 million applications for new gas connections are awaiting approval of the company.

The country was facing gas shortages as politicians were using it as a tool to win elections.

During the meeting, National Assembly member Mian Tariq Mehmood, who belonged to the ruling PML-N, alleged that SNGPL had provided 100 gas meters in his constituency to please his political rival Imtiaz Safdar Warraich, though his requests for new meters were turned down repeatedly.

He insisted that the provision of gas meters to his opponent had damaged his political image. NA Standing Committee Chairman Bilal Ahmed Virk accused Director General Petroleum Concession Saeedullah Shah of not responding to the committee for the last two years.

Sui lease extension: PPL to pay 10% bonus to Balochistan

Describing Shah’s attitude as non-sense, he said he was not cooperating with the committee and sought the record of past meetings to show response of the director general of petroleum concession.

The committee also took up for review the issuance of licences for liquefied petroleum gas (LPG) stations to the defaulters that were previously running CNG stations.

It recommended that rules of Oil and Gas Regulatory Authority (Ogra) should be amended to ensure the clearance of outstanding bills of SNGPL, Water and Power Development Authority and banks before issuing licences for setting up LPG stations.

Riaz Haq said...

Chinese-backed coal excavation and power plants will displace thousands of people and deplete groundwater in Thar, a region ravaged by drought.


The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species. Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. Twenty five percent of people live within the proposed coal development area. They thought they would benefit, but that has not been the case.

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It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the USD 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.

In December 2015, China approved a USD 1.2 billion investment for surface mining of Thar coal and the establishment of 660 MW power projects. The deposits are divided into 12 blocks, each containing 2 billion tonnes of coal. In the first phase the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company (SECMC) to excavate 1.57 billion tonnes of coal and build a 660 megawatt power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.

A state-owned Chinese company, the China Machinery & Engineering Corporation, is providing the machinery and technical support for the excavation of coal and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. SECMC say the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including the engineers, miners and experts are also working on the site.


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The Chinese team have started excavating the first pit. In the first phase SECMC will relocate five villages, which are located in block II, including Thario Halepoto village.

SECMC has started paying villagers for their homes and agricultural land. SECMC’s chief executive officer, Shamsuddin Ahmed Shaikh, claims that his company will do all they can to help the villagers.

“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net

He said that the company is paying villagers above market prices for their land – PKR 185,000 (USD 1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.


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A SECMC official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18 acre area called the Green Park and more trees will be planted in next two years.

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SECMC’s Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.


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http://thewire.in/62053/pakistans-coal-expansion-brings-misery-to-villagers-in-thar-desert/

https://vimeo.com/179874726