Performance of Government in Petroleum Sector

May 30, 2018

Performance of Government in Petroleum Sector



§         In 2013, the total primary energy supplies of country were 65 million tonnes of oil equivalent which in 2017 has increased to 85 million tonnes of oil equivalent depicting an increase of 23%. It is expected that total primary energy supplies of country for 2018 will be over 85 million tonnes of oil equivalent.


§         In 2013, Gas price for first slab of residential consumers was Rs 106 per million BTU which is Rs 110 per million BTU at present showing a minor increase of Rs 3.7% during five years.


§         Following the 18th Constitutional Amendment, a Model Petroleum Concessions Agreement was developed in consultation with all provinces and forty-six (46) new exploration licenses were granted during present government tenure.


§         After approval of declaration of commerciality and field development plans, fifty-one (51) new development and product lease have been granted during tenure of present government.


§         In addition, seventy-three (73) supplemental agreements have been signed to convert old licenses into the new regime under latest Petroleum Policy 2012.


§         During last five years, a record number of 446 new wells were drilled which included 221 exploratory wells.


§         During the tenure, 116 new discoveries were made which shows a 50% success ratio in the country.


§         35,000 barrels per day oil production have been added from the new discoveries.


§         900 million cubic feet per day (MMCFD) gas have been added from new discoveries which, despite depletion effect of old fields, enabled the system to maintain the indigenous gas production above 4,000 MMCFD.


§         Gas production from some fields could not be previously commissioned due to non-establishment of processing plant on account of various reasons. During the tenue, the long-awaited processing plant at Kunnar-Pasaki Deep fields have been established. Further, gas processing plants at Nashpa, Makori and Gambat South fields have also been established. Establishment of these plants have contributed in doubling the production of Liquified Production Gas (LPG).


§         Gas Development Surcharge (GDS) which is distributed to provinces was Rs 73 billion for 2017 as compared to Rs 30 Billion for 2013.


§         During the tenure, record 1,700 KMs of high pressure gas transmission lines were laid and commissioned in country. This include system augmentation project from transport of 1,200 MMCFD gas (Re-gasified LNG) from Port Qasim to upcountry. In addition, two more South-North Gas pipelines are being pursed in collaboration with China and Russia.


§         Over 25,000 KMs gas distribution lines were laid during the period of present government.


§         During the tenure, two (2) million new connection were provided which increase the number from seven (7) million to nine (9) million. For the first time, Government adopted a merit policy where gas connections were provided on first come first serve basis.


§         Previous governments made five (5) attempts to import LNG, none of which could succeed. This government has successfully implemented the unbundled approach. So far, two LNG Storage and Regasification Units each having a capacity of 600+ MMCFD gas have been commissioned. LNG in being procured from international suppliers at most competitive rates under Government to Government contracts basis as well as competitive bidding.


§         The LNG flow has enabled the continuous operation of CNG stations, industry and fertilizer plants. It is important to mention that prior to this government, over 1,000,000 tonnes per annum of Urea was being imported whereas during tenure of present government, 600,000 tonnes per annum of Urea has exported.


§         Furnace Oil utilization in old power plants have been replaced with gas which is competitive and clean. In addition, new gas based power plants having 62% efficiency have been

established. The LNG utilization in power sector is resulting in US$ 1.5 – 2.0 Billion saving on annual basis on account of fuel replacement.


§         Work on Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project has started, which was dormant since long. It is expected that gas supply from this project will start in 2020.


§         Sale and disposal of Liquified Petroleum Gas (LPG) has been made transparent through competitive bidding by elimination of old quota system.


§         LPG pricing has been regulated which resulted in stable price of LPG @ Rs 1,200 per cylinder as compared to previous rate of Rs 2,500 per cylinder.


§         LPG Air-Mix plants are being established in far flung areas and mountainous areas where supply of gas through piped network in uneconomical. These include Chitral, Awaran, Gilgit etc.


§         Euro-II Diesel (500 ppm) has been introduced replacing 5,000 ppm Sulphar content Diesel.


§         92-RON motor gasoline introduced replacing 87 RON. In addition, 95-RON and 97-RON motor gasoline is being marketed by OMCs in deregulated regime.


§         To enhance competition in market, twenty-three (23) new Oil Marketing Companies (OMCs) have been allowed to market petroleum products.


§         Both dealers’ and OMCs’ margins on diesel and motor gasoline have been deregulated by the Government so as the same may be fixed by OMCs on competitive basis.


§         New storage of 200,000 metric tonnes motor gasoline has been added by OMCs to overcome the increased demand of the product.


§         Existing pipeline from Karachi to Lahore which is only for diesel transportation is being dualized to allow transportation of motor gasoline to avoid road congestion.


§         From Lahore to Peshawar, a new White Oil Pipeline is being constructed for transportation of Diesel and Motor Gasoline for which investment of Rs 1 billion will be made.


§         Import of Furnace Oil is being gradually eliminated and no import of Furnace Oil after 2019. In future, only local refineries production of Furnace Oil will be consumed.


§         Pakistan Refinery Ltd, Karachi is being converted into Deep Conversion oil refinery alongwith capacity enhancement from 50,000 to 100,000 barrels per day.


§         Two more state of the art oil refineries of 250,000-300,000 barrels per day will be constructed:


o          PARCO Coastal Refinery project near Hub costing US$ 5 Billion (Funds for this project have been arranged)

o          Upcountry Refinery project to be located near Lahore alogn with Crude Oil pipe line from Karachi to refinery location costing US$ 6-7 Billion


§         The new refineries will produce main grade Euro-IV and Euro-V petroleum products i.e. for motor gasoline and diesel to cater the needs of country and environmental friendly fuels.